Can Bankruptcy Help With Payday Loan Debt?

 Posted on June 10, 2025 in Bankruptcy

Most people turn to payday loans during financial emergencies, expecting to repay them quickly with their next paycheck. But when these short-term loans lead to a recurring cycle of debt with crushing interest rates, you might find yourself trapped under mounting debt. If this sounds familiar, Chapter 7 bankruptcy might offer relief. An experienced Dallas, TX bankruptcy attorney can advise you on your rights and help determine if filing for bankruptcy is the right solution for your payday loan debt.

Why Are Payday Loans Problematic?

While they are marketed as quick solutions for people facing temporary financial shortfalls, payday loans come with extremely high interest rates. The typical payday loan has an APR of over 300. This means that by the time payday arrives, you may find yourself unable to repay the full loan amount plus fees. 

This forces you to roll over the loan, adding more fees and interest charges. As a result, you may end up paying far more in fees than the original loan amount and taking out additional payday loans from different lenders just to make payments on existing loans, adding to your existing high-interest debt.

How Can Bankruptcy Help With Payday Loan Debt?

The good news is that payday loans are generally considered unsecured debt, which means they can typically be discharged in bankruptcy. Both Chapter 7 and Chapter 13 bankruptcy can help with payday loan debt, although they work differently.

In Chapter 7 bankruptcy, most payday loans are completely eliminated, giving you a fresh financial start in about four months, which is the typical length of a Chapter 7 bankruptcy. Chapter 13 bankruptcy allows you to make a payment plan to repay the payday loan debt along with other debts over three to five years. As an added benefit, in both cases the automatic stay goes into effect, which immediately stops all collection activities, including the harassing phone calls and threats that often accompany payday loan debt.

Call a Parker County, TX Payday Loan Attorney

If you obtained a payday loan when finances were tight, but now find yourself reeling from ever-increasing debt tied to the loan’s high interest rates, you can turn to the experienced Fort Worth, TX bankruptcy attorney. At Acker Warren P.C. we can examine your case and advise you on whether filing for Chapter 7 bankruptcy can help you tackle payday loans and other debt you may have. Call the firm at 817-752-9033 for a complimentary consultation.