New Jersey Bankruptcy Lawyer Explains Payday Loans

People with financial difficulty often turn to bad solutions because their options are limited. Bad credit ratings usually lead them to predatory lenders that take advantage of them and, in most cases, make a bad situation worse. If you are looking for a solution to take care of your debt, our skilled New Jersey bankruptcy lawyer may be able to help.

Why Payday Loans are Not Legal

Payday loans are not legal in New Jersey and have been banned. This is because payday loan interest rates violate New Jersey's usury laws. New Jersey has an interest rate cap of 30%, and the lowest rate offered by these lenders is often well in excess of this and is usually over 400% when expressed as an APR.

In addition, New Jersey banking laws prohibit anyone from cashing or advancing money on a post-dated check. This is because these are short-term cash loans based on the borrower's personal check held for future deposit or on electronic access to the borrower's bank account.

Borrowers will write a check for the amount borrowed, plus the finance charge, and receive cash in return. Hence, the company essentially lends money (cash) in return for a post-dated check.

What Should I Do?

Taking out a payday loan often indicates severe, long-term financial difficulty. You need to look hard at where you are financially and whether there is a practical way out. You may want to consider bankruptcy as an option. You can download the free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey to help you make that decision.

If you live in Southern New Jersey, are in severe financial distress, and are thinking about filing bankruptcy, please feel free to contact attorney Steve Richardson to schedule an appointment to discuss the best way to handle your situation.

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.