Hi, I am new here. I need some advise. We are filing chp 7, long story. But anyway, I have 4 payday loans out. Dumb I know, I now see how stupid that was, but, I'm caught in the trap. I advised our lawyer about them and he said I have to stop paying them, well I'm afraid to do that. I've seen all the bad stories and plus I feel bad, since I knew we would be filing and I was still taking them out. I have to turn my paperwork over to the lawyer next Friday and I also have the payday loans due on Friday. I can pay 1 off then, however, the lawyer says if I do that then someone might object and get my case thrown out. I just don't know what I should do here. I'm in Ohio if that helps, I don't know what the law is on bad checks, I've tried to search the Internet but I can't seem to find any information on payday loans and bad checks. Thanks Harry
Catch 22! You did take the loans out knowing that you were going to file for Bk, therefore, they can be exempted from discharge under Section 727. However, given the amount of the pay day loans, the company may not hire a lawyer to pursue their interest. As far as paying off the pay day loans, it depends on the amount. The code will allow some debts to be paid pre-petition and the Trustee may see no advantage in going after a smaller pay day loan. If you pay off payday loans and the amount is significant, then it could be a preference under the code and the trustee could unwind the transaction and disperse the funds to your unsecured creditors. Ohio Laws and Hot Checks: I am unsure what the Ohio laws are, but in my experience, you leave a check in exchange for the loan and they deposit the check on your payment date. If the hot comes back or does not go through (because of stop payment), then they may try to process the check electronically. Ask your attorney about filing your case before Friday and sending notice out to the pay day lenders as soon as possible. This may prevent the lenders from cashing the checks, since collection attempts on pre-petition debts after the filing, are considered violations of the automatic stay. More importantly, check with your attorney, and please understand that this is not legal advice.
