Chapter 13 bankruptcy may be better solution than payday loan

When driving through or walking around your local community, you may notice several payday lending storefronts. These stores have become a seemingly integral part of society. Yet, their negative impact may go unnoticed. Although they may appear to be a quick, convenient solution to financial troubles, other tools like filing for Chapter 13 bankruptcy are far more effective and positive.

Mississippi is one of the states with the highest amount of payday loan stores for every 10,000 residents. And typically, these stores situate themselves in low-income areas -- essentially preying upon those who are already suffering from financial challenges.

Payday lenders appear to offer the possibility of a fresh financial start to those with lower income. However, quite the opposite is true. A recent study by the Insight Center for Community Economic Development reveals that these lenders actually create more financial challenges. They strip low-income individuals of their much-needed income. In fact, there has been several millions of dollars lost.

Fortunately, there are other solutions that offer effective debt relief. One solution is filing for Chapter 13 bankruptcy. Most Mississippi residents do not recognize that this is solution, however, because filing for bankruptcy can appear daunting.

Filing for bankruptcy is relatively straightforward once you identify the steps. First, an individual files a petition in the state in which he or she lives -- or the place of domicile. Also, the individual should include several financial documents with the petition. The documents include a list of assets and debts, income and other financial information. The individual must also pay some fees. The bankruptcy court will then appoint a neutral trustee to work on the case and collect payments from the individual to pay creditors. During this time, the court will place a stay on all collection efforts so everything is processed through the trustee if possible.

In the end, filing for bankruptcy will not come with additional fees, interest and payments like payday loans. Instead, an individual will have a sense of real debt relief.

Source: Atlantadailyworld.com, "Payday Lending Drains Nearly $1 Billion From Communities," Charlene Crowell, April 1, 2013

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