There are times when finances seem to suffer from several issues all at once. If it seems like the adage "when it rains it pours" is referring to your wallet, then you may be the victim of poor financial planning along with just plain bad luck. You might be struggling to pay bills already, and then a car repair or unexpected medical bill hits you where it hurts. It's interesting to note how falling victim to emergency financial needs and the way people attempt to remedy the situation is connected with filing for bankruptcy. Read on to learn more about what could happen if your financial situation includes having both a payday loan and an upcoming bankruptcy.

What to know about payday loans

This manner of providing applicants with quick cash is quite popular and for a good reason. People that cannot count on generous friends or relatives and that haven't put aside funds for a rainy day often have no choice but to show up at one of these payday lending stores with pay stub in hand. The way it works is simple:

1. You provide the payday lender with a check stub or statement to prove employment.

2. You also provide the lender with a signed, post-dated check from a valid checking account.

3. You sign several documents and among them is an agreement that the check will be presented to the bank on your next payday.

4. You agree that penalties and interest will accrue if you fail to honor the check.

5. You agree that the payday loan can be renegotiated (refinanced) if you cannot meet the obligation.

6. You agree that the loan cannot be listed in a consumer bankruptcy filing.

Payday loans and bankruptcy

The payday lender is counting on the applicant to not question the agreement and not to list the payday loan on any bankruptcy, but in fact, they can be listed. Your payday loan is considered an unsecured loan and can, therefore, be listed on your bankruptcy paperwork right alongside the credit card bills and any other personal bills. This type of loan is not secured by any property, and the lender holding a post-dated check and that agreement has no legal standing to enforce the agreement when the applicant declares a chapter 7 bankruptcy.

If you've signed a payday loan agreement and now need to declare bankruptcy, speak to a bankruptcy law office like Charles J Schneider PC for advice on how to proceed.