The American economy is always changing and there are always new loan companies and new ways to borrow money. Most people know that bankruptcy works on (discharges) credit card loans and medical bills, but you may be wondering if bankruptcy works on fintech loans or Internet loans. The short answer is that these loans get discharged in bankruptcy just like a credit card.
Some examples of Internet loans, or fintech loans are: Opploans, Finwise, Afterpay, Loan At Last, Money Lion, Upstart, Kabbage, Lending Club, Prosper and many more. These loans are innovative because people get them on the Internet and they don’t require a card or a physical visit to a bank. The borrower simply applies online and the lender then puts the loan proceeds (the money lent) into the borrower’s checking account. The borrower then uses the proceeds for whatever the borrower needs and promises to pay back the loan amount with interest over time.
These loans often have a high interest rate and are designed to take automatic payments from the checking account quickly and whenever the borrower’s paycheck arrives. This can make it hard to afford things like rent and groceries if you are living paycheck to paycheck.
Both chapter 7 and chapter 13 are designed to discharge loans from banks, credit unions, and other types of loans also. These Internet loans are no different and they go away in bankruptcy just like credit cards and medical bills.
WHEN DO INTERNET LOANS SURVIVE BANKRUPTCY?
Internet loans survive bankruptcy when the borrower was fraudulent in taking them, or when they were taken right before the bankruptcy filing.
What is fraud? Fraud is when the borrower took the loan with no intention of ever paying it. Fraud is difficult to prove and has a very complicated definition. If the lender wants to say that the loan survives bankruptcy because it is fraud, then the loan company must get a lawyer and go to court to prove fraud. If the loan company doesn’t go to court to prove fraud, then the loan goes away.
Most loans are not fraudulent, they are taken by people who need the money and who do their best to repay it, but don’t have enough money to afford the payments every month.
How do I know if it’s too recent? A good local bankruptcy lawyer, like Walker & Walker will be able to look at your credit report and financial situation to find the optimal moment to file the bankruptcy. It is normal to use timing as a piece of strategy to get the best results from the bankruptcy.
These loans could also technically survive bankruptcy if they were used for tuition and had a loan contract saying it was a student loan, or if they were used to pay recent taxes.
WHAT ABOUT BUSINESS LOANS GOTTEN OVER THE INTERNET?
Business loans gotten over the Internet are also dischargeable in bankruptcy. Some common business lenders that work over the internet are Kabbage, Credibility Capital, Funding Circle, OnDeck Capital, FundBox, and many others. These go away in bankruptcy just like a Finwise loan or something from Loan at Last or a credit card.
If you aren’t sure whether your loans will go away or not, Walker & Walker offers free consultations to make sure that bankruptcy will work for you. Our attorneys are also skilled in making a plan to make sure that your loans will go away in bankruptcy. Often with some planning and good timing, it is possible to make all Internet loans get discharged in bankruptcy. Some of these loans have very high interest rates and assume that people will file bankruptcy on them, so the lender is actually EXPECTING their borrowers to file bankruptcy.
To get started, just call 612-824-4357 or fill out the contact form on this page!