Lots of folks here in the Gloucester County, New Jersey area call me asking about Western Sky loans. They took one out and are now being pursued by collection agencies or debt buyers asking for an exorbitant amount of money paid immediately. The question they have is, what can they do? What are their options?

I maintain that if you have obtained a loan from this company, or other types of high risk options like pay day or car title loans, that it is a symptom of a much bigger financial problem. If that is the case, then rather than fight Western Sky, you should just file bankruptcy and discharge it.

Can Bankruptcy Help?

So, in answer to the question, yes, bankruptcy can help save you from Western Sky. Loans to this outfit are no different than credit cards and medical bills (no matter what the collector may say to you on the phone), and thus can be wiped out, or discharged.

There are pros and cons to this approach, though. The con is that it can have a more devastating effect on your credit than just defaulting on the one loan. Thus you should check all three of your credit scores to see if you have bad credit already.

If so, that might not be a downside. The pro is that bankruptcy is a broader approach to your problem, addressing ALL of your debt, not just one.

Or Should I Fight It?

You could also fight any attempt by Western Sky to collect the loan.  Loans from this company are illegal in New Jersey due to their extremely high interest rates, which are often far in excess of 100% annually.

New Jersey considers it criminal usury to charge 30% or more on a loan. Some states have a higher threshold for illegality, however, like Delaware at 35%.

Thus some loans that are issued under another state's law may be legal if they come into New Jersey to collect. But Western Sky boasts of being apart from the U.S.A., and thus would not be entitled to "full faith and credit." New Jersey courts may well look harshly on their attempts to collect.

So What Do I Do?

If you are not sure about whether bankruptcy is the right solution to your problem, then you should download my free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey to find out.

If you live in southern New Jersey and are thinking about filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

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