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Can a Payday Loan be included in Bankruptcy?
A payday loan is an unsecured debt. As such this type of debt is always included and written off if you go bankrupt.
You may be concerned if you took the loan quite recently. Will you be accused of fraud? Don’t worry. You will not.
The loan company will never formally make this accusation against you. If they were to try, the court would blame them for making a bad lending decision and not making better checks about whether you could repay the loan.
Payday loans are written off if you go Bankrupt. You do not need to be worried about being accused of fraud.
Can you get a new loan while you are Bankrupt?
It is not illegal to apply for a new payday loan while you are bankrupt. The rules state you are not allowed to borrow more than £500 without telling the person lending the money about your Bankruptcy.
Borrowing less than £500 from this type of lender is common. As such it is likely you will get the loan because you do not have to mention you are bankrupt and the lender is unlikely to carry out a credit check against you.
However you should avoid borrowing more while you are bankrupt if possible. The issue is that it will be almost impossible for you to repay the new debt. It cannot be included in your bankruptcy as it has been taken after the start date.
It may be possible to get a new loan while you are bankrupt. However you should avoid doing so.
What if you have already taken a payday loan during Bankruptcy?
Any new debt you incur after the date of your bankruptcy cannot be included in the agreement. You will be personally liable to repay it. As such you will have to repay any new payday loan you take out.
If you are currently paying an IPA your Official Receiver might allow you to take a payment holiday. However if they do not you will have to repay the loan by making savings from your agreed living expenses budget.
If you have no disposable income you will have no choice than to repay the loan by making savings elsewhere.
Want more advice about payday loans and bankruptcy? Give us a call (0800 044 3194) or complete the form below.
I have been advising people on how to solve their debt problems for over 20 years. During this time I have helped many people go bankrupt. I am an FCA Approved Person and the Managing Director of Wilmott Turner Financial Services (owner and operator of Bankruptcy Expert