It is often difficult to tell when you have too much personal loan debt. Typically, when you take out the loans, you are able to make the monthly payments without a problem. However, it is not uncommon for people to begin to struggle to make payments after time. Mounting debt that you are unable to pay leads to anxiety, stress, depression, bill collectors, lawsuits, and possible judgments.
If personal loans have you overwhelmed, you are not alone. Experian reported that the average consumer in 2020 had as much as $16,458 in personal loan debt. If you are struggling under mounting debt, you might be wondering if bankruptcy can help you achieve financial relief. Personal loans from different consumer lenders like: One Main Financial, Local Finance, Security Finance, Southern Finance, Quick Credit, First Franklin, World Finance, Regional Finance, Community Credit, Republic Finance and many others fall under common categories of debt that can be discharged in the case of bankruptcy. Filing bankruptcy to wipe out an overwhelming amount of personal loan debt is often the best decision to make for your long-term financial security.
Another harmful type of personal loan is a “cash-advance” loan or “payday loan” and “title lenders” where you borrow a small amount of money at a very high interest rate where the lender gets your checking account information and starts to draft its payment out of your checking account.
All of these different types of personal loans for consumers are at a very high interest rate which make them very hard to every payoff.
Chapter 7 Bankruptcy
Personal loans are almost always discharged in a Chapter 7 bankruptcy, with few exceptions. Chapter 7 can be executed quickly for fast relief. If you qualify for Chapter 7 (based on income and assets), then filing bankruptcy can help you discharge your debts in a matter of months to help you get a fresh start. One exception to cancelling or discharging personal loans is when the personal loan has property or collateral security the loan. Even if you gave collateral when you got the personal loan, you may be able to cancel the debt depending on what type of collateral you listed.
Chapter 13 Bankruptcy
If you earn too much income to qualify for Chapter 7 or if you have too many valuable assets, Chapter 13 bankruptcy may help you reorganize the debt you owe to make payments manageable. This process allows you to reorganize your debts and develop a repayment plan for up to five years. Chapter 13 gives you an opportunity to pay a percentage of your debt back (based on your ability to pay and assets).
Not All Personal Loans Can Be Discharged
There are several types of personal loans that cannot be discharged through bankruptcy. These loans typically include loans that include collateral or property that you listed on the paperwork to secure the repayment of the loan if you don’t make the monthly payments. In addition, recent cash advances on a credit card or recent purchases of luxury items may not be eligible to be cancelled. It is important to consult with an experienced bankruptcy attorney to determine if your loans can be discharged through bankruptcy.
Determining What Is Right For You
I am offering a FREE consultation so that you can thoroughly understand your options. I will personally take your call to explain the bankruptcy process and costs so you can make an informed decision for your future. You are not hiring me with this call. You are simply learning more about your options. Our discussion will be fully confidential.