Quick Answer: Payday loans after bankruptcy can worsen financial situations since Chapter 7 filers cannot file again for several years. The borrower should immediately stop taking payday loans and focus on increasing income while negotiating affordable repayment plans with creditors using available cash.
“Dear Steve,
One of my friends has filed for Bankruptcy and she had to take some online payday loans due to her situation after filing for Bankruptcy. She also has some medical bills. Can she add those in debt settlement? Will the creditors work with the settlement company knowing she has already filed for Bankruptcy?
PS”
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Dear PS,
Oh my.
Consumer bankruptcy offers some exceptional opportunities for people to start over from a bad financial situation.
But if your friend filed a chapter 7 bankruptcy then they are not eligible to file again for some time.
This means they will need to negotiate a repayment plan they can afford with the creditors. Taking out payday loans when you can’t afford to repay them in full on the next payday, is financial suicide. Your friend needs to stop doing that. Now!
A debt settlement approach might work, but only if your friend has the cash on hand to settle those small debts. It sounds like they are already behind on the bills so the time would be ripe to negotiate a settlement if they have the ability to pay it.
But the underlying issue here is it sounds like there is a lack of income to meet basic living needs even following a bankruptcy. In that case the focus should be on increasing income and then negotiate a repayment plan with the creditors.
Please post your responses and follow-up messages to me on this in the comments section below.
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