I won’t bother with lecturing you about how payday loans are some of the worst kinds of loans you can get (where else do you see 500-1000% interest rates?) But if you have them and you are going to file bankruptcy, how do you deal with them?

First off, payday loans are dischargeable debt. So if you are going to file, you might as well stop paying them now. Since payday loans traditionally use post-dated checks, the first thing to do is to have your bank dishonor the check to the payday lender. The newer, online payday loan places do ACH deductions directly from your bank account, but the same rules apply. Have the bank reject the ACH.

If your bank won’t cooperate, close the account. I know it is a hassle to close the account, open a new one and have your direct deposit moved, but it is the only way to be sure that you keep your money. The payday lender will keep trying to cash the check, so you would end up with a mess of bounced check fees.

Lastly, the FBI and the police will not come after you for a dishonored payday loan post-dated check. Criminal prosecution for bad checks require an intent to pass a bad check at the time it is written. The payday lender knows your post-dated check isn’t good at the time you write it; why would you be borrowing money at 1000% interest if you already had the money in your bank account? There have been reports of people collecting for unscrupulous payday lenders pretending to be from the FBI. Don’t believe them. Ask them where their field office is (300 Ala Moana Blvd.).