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Is Canceling a Check for a Payday Loan Considered Fraud if I Plan to File Bankruptcy?

Posted By Allmand Law Firm, PLLC || 13-Jan-2014


Payday loans can help you take care of emergency situations, but some find it frustrating when they have to start rolling over their loan or take out multiple loans just to make ends meet. Some debtors are worried about what may happen if they plan to file bankruptcy and want to stop payment on a check. Some payday lenders are quick to make threats regarding canceling a check upon filing for bankruptcy.

Payday loans allow you to borrow money against your next paycheck. You often need to have a checking account and earn a certain amount of income each month in order to qualify. When you borrow funds you write a check that is post-dated (to secure the loan) for the lender to use to retrieve funds you have borrowed. You may be charged a fee based on how much you borrow. This is why when the loan is paid back to the lender you pay back more than the amount originally borrowed.

Some lenders may claim you are trying to commit fraud if you write a check and cancel it or they consider it a bad check. This is not exactly fraud since the check is post-dated. Both you and the lender knew the funds were not available at the time the check was written. Most people in this situation have good intentions on paying back the loan. In many cases, payday lenders won't make much effort to challenge a debtor's filing.


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