#1 Rated Bankruptcy Lawyers in San Diego

Online Loans Carry Risks and May Lead to Bankruptcy

Online Loans Carry Risks and May Lead to Bankruptcy | Bankruptcy Law CenterIn the aftermath of the financial crisis, it has been harder for some borrowers to secure credit from the same sources as before. For example, in the years leading up to the crisis it was not very difficult for a person to obtain credit through a home equity loan, credit card withdrawal, or even a payday loan. The financial crisis changed that situation for many borrowers.

One of the consequences of the financial crisis was for lending institutions to shore up their lending policies and act more scrupulously in regards to whom they would lend money. This had an ill-effect on many borrowers who were left in the wake simply unable to meet the credit requirements to get a loan.

Online Loans

This problem led to a new kind of lender to emerge and offer loans to those who need them the most. As chronicled by The Los Angeles Times in a recent article, this situation led to online lenders cropping up and offering to lend money to people. The only problem was that the interest rates could be crushing and even lead people to file for bankruptcy without much choice.

In this new industry, it is reported that many of the loans can easily reach triple digits. In such a scenario, a person could borrow $5,125 at an interest rate of over 100%, causing the borrower to pay back more than $40,000 over the lifetime of a loan. Despite laws that regulate interest rates on smaller loans, most states do not have laws regulating loans for larger amounts.

Bankruptcy and Online Loans

In many cases, such crushing interest rates will leave a person with few options – one of those being bankruptcy. Of course, the companies offering these kinds of loans know this and have a backup plan to deal with bankruptcy. Often such a loan will be dischargeable in bankruptcy, but in some cases, there will be some push back by the loan company.

Under the U.S. Bankruptcy Code there are exceptions to which kinds of debts are dischargeable through a bankruptcy petition. One of the more famous of these exceptions is that student loans are not dischargeable in bankruptcy, but there are other, less well-known exceptions, as well.

One such exception can be exercised by a lender if he or she can prove that a debt was taken without the ability to pay, or when a borrower is insolvent. Of course, an obvious pushback to this argument is that if a lender is going to lend money, then he or she has the obligation of finding out to whom the loan is being made, and whether or not that person is a risk.

Proving Your Case

In this kind of scenario, it is important to have the right legal team behind you because it is an issue that is increasingly being fought over in bankruptcy courts, particularly in California. If a lender can prove this exception, then that debt will not be discharged, and the borrower is left with the debt. A borrower has the right to contest this issue, and should, with the best legal team available.

At The Bankruptcy Law Center we represent people in their attempt to discharge online loans, and many other types of debt. As you consider whether bankruptcy is right for you, contact us.

(image courtesy of Glenn Carstens Peters)

See What Our Clients Have To Say

Yelp Review

Roger C.

I reached out to BLC to help assist with a chapter 7 business bankruptcy and they provided excellent guidance, advice, and support through the entire process. In my case an adversarial action was filed by one of the creditors and attorney Ahren Tiller and his staff provided sound ...arguments which prevailed. Couldn’t have found a more experienced and supportive team to represent me in a tricky situation. I would highly recommend them to anyone making the difficult but sometime necessary decision to find financial relief. Read more
Yelp Review

Justin R.

Like many others before and during the pandemic, life happenings caused me to be in a financial situation to warrant bankruptcy. The BLC was super professional all the way through the entire process. Right after I paid for my Bankruptcy, I got sick and had to have surgery and recovery. Then we ...were in full Pandemic mode. They were gracious to delay my filing until I was recovered and ready to file. I could not ask for more. The process was over all quick and painless for a simple Bankruptcy like mine. I feel a weight has been lifted and I can rebuild. Thank you for all your arduous work and patience, Gabriel, Ahren, and their teams are knowledgeable and efficient. Read more
Google Review

Katey Huntley

Responsive, friendly, kind, extremely easy to work with! So knowledgeable and made this entire process painless. Very grateful!

Google Review

Lynn Molina

Gabriel Hanna, Esq and the staff at BLC helped me in a very difficult time. I appreciate all the help and care they gave my case.

Google Review

Linda Cramer

I can’t say enough of how much this bankruptcy law firm helped me with my financial situation. They were all so helpful, efficient and made the difficult time and process as quick and easy as possible. I would recommend them to anyone I know and am glad to give my public recommendation as well. T...hey truly deserve a five star plus rating. Read more
Yelp Review

Andrea N.

I am very happy with my experience with BLC. Bankruptcy is not something anyone wants to go through, however everyone at BLC made my experience pleasant and easy. The process was explained thoroughly and I had an easy time reaching out and connecting with my attorney. Anika Renaud-Kim was my attorney ...and she was nothing short of amazing! She was very patient and generous with her time. Ms. Renaud-Kim definitely made me feel at ease and comfortable through the entire process. Read more
Facebook Review

Lidia Paramore

they did a great job for me, helped me anytime I needed something, my Lawyer Gabriel Hanna is the best, gave lots of confidence all the time..thanks BLC I will.always recommend you, I’m very grateful for your service!!!

Yelp Review

Rachael C.

When searching for information I had called a few different firms and received consults. BLC was the only one who didn’t shy away and provided answers and information during the consult. Once I agreed to move forward, they were supportive, informative, and eased my anxiety through the whole process.... I can’t recommend them enough. Read more
Google Review

Emily Martinez

AmazingI had many questions and uncertainties and the carefully explained it all and made it easy to understand. They facilitated a fast and easy process making this scary difficult thing simple

Ready To Eliminate Your Debt?

Bankruptcy is still the best option. Other debt plans make promises, but only bankruptcy delivers.




1230 Columbia St. #1100 San Diego, CA 92101


11500 Olympic Blvd., 4th Floor Los Angeles, CA 90064


380 South Melrose Drive #308 Vista, CA 92081
© 2023 Bankruptcy Attorneys. All Right Reserved.

Legal Disclaimer: The Bankruptcy Law Center is a California Licensed law firm with attorneys licensed in the state of CA, NY. Attorney Ahren Tiller is responsible for this advertisement. Bankruptcy Law Center’s principal office is located at 1230 Columbia st. Suite 850 San Diego, CA 92101. Prior results listed on this site do not depict or in any way infer a prediction or outcome.We are a debt relief agency proudly providing options to people with financial problems. View our Privacy Policy

© 2023 All Rights Reserved.