If you are struggling financially and are thinking about taking out a payday loan to pay for bills, you should be aware of the high cost.  Payday loans, aka cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans, are small, short-term, high-rate loans.

How a payday loan works is when a borrower writes a personal check to the lender for the amount borrowed plus the fees.  The lender gives the borrower the amount of the check less the fees and agrees to cash the check on the borrower's next payday.  For example, if you want to borrow $250, you have to write a check for $300 to the lender who will cash the $300 on your next payday.  In this example, the fee is $50, which is very high and is typical among payday loan companies.  If the borrower cannot afford to pay the lender back, usually what happens is that the borrower borrows again from the lender to cover the loan due ($300) and the lender charges the borrower additional fee ($50).  Now the borrower owes $350 on the next payday.  Don't be surprise if the annual percentage rate (APR) is over 300 percent.

If you are having trouble coming up with the initially $250, you will have a more difficult time coming up with the $250 plus all the accumulated high fees.  In many cases, the borrowers just dig themselves into a bigger hole they cannot get out from.  This is true for many of my clients who ended up filing Chapter 7 or 13 Bankruptcy because they could no longer keep up with their debt payments.  If you are considering filing for bankruptcy, you should stop use of all credit and contact an experienced Bankruptcy Attorney.  Continuing taking out loans when you plan to file for bankruptcy will most likely lead to a non-discharge of that debt due to fraud.

Always consider other low cost alternatives before deciding to take out a payday loan.

If you are struggling with debt payments and you need a way out, call Muoi Chea Bankruptcy Attorney for consultation at office locations in Sacramento, Stockton, and Fairfield, California serving all residents of Sacramento, San Joaquin, Solano, Placer, Yolo, El Dorado, Stanislaus, Calaveras, and surrounding counties.  I will discuss whether Chapter 7 and 13 Bankruptcy is a good option for your case as well as bankruptcy alternatives.