Payday Loans are Dischargable in Minnesota Bankruptcy

Payday loan providers have been in the news lately in Minnesota because of alleged unfair practices relating to interest rates.  For those who are unfamiliar with payday loans, the practice relates to giving loans to individuals who need cash before their next paycheck.  In exchange for the short term loan high fees and high interest rates are charged.

Minnesota Attorney General Swanson has alleged that many of the companies are violating MN law by rolling over loans, over charging fees, distributing financial information to third parties and loaning more than allowed for short term loans.

Many individuals living paycheck to paycheck would be better off filing bankruptcy to discharge their unsecured debt and then using funds that previously went to unsecured creditors to create a rainy day fund.   After fees and interest rates are included, bankruptcy costs much less in the long run than trying to repay credit card debt and payday loans.