Some banks have recently announced that they are essentially entering the payday loan business. These loans have traditionally led to high costs and abuses greatly jeopardizing the well being of consumers. It may be true that an employee desperately needs immediate funds and an advance on his or her paycheck might be needed for the rent, utility bill, or other necessity. But payday loans have high fees and lead to a need for a loan on each additional check creating a never-ending cycle of high fees and inability to catch up.

Payday loan companies are often the nastiest and toughest trying to call and collect when the loans are not repaid. They often lie threatening criminal prosecution for a bad check. But the checks they hold are post dated; the debt is based on a promise to pay. There is no current exchange of goods and services for a current check.

Payday loans can be discharged in bankruptcy like any other debt.

As a Fort Lauderdale bankruptcy attorney, I have seen the changes in bankruptcy filings in the Southern District of Florida. Statistics are often misleading, but a review of the number of bankruptcy filings is informative.

Keep in mind that the bankruptcy law was changed in 2005. There had been a steady increase in bankruptcy filings. There was a stampede to the courthouse in 2005 as debtors rushed to file cases prior to October, 2005, when BAPCPA became effective. (It was effective earlier as to homestead issues.) Since so many people filed bankruptcy in 2005, there was a delay for there to be a new group of individuals who needed to file. And with the economic downturn and foreclosure crisis, bankruptcies have again greatly increased.

How has this affected the practice of bankruptcy? Many attorneys dropped out of the bankruptcy practice in 2005. They did not want to learn the new law and the number of clients greatly decreased. More recently, bankruptcy has become popular again and many attorneys are just starting to practice bankruptcy.

The following bankruptcy statistics are from the Clerk of the Bankruptcy Court from the Southern District of Florida and includes the total number of filed cases, includng chapter 7, 11 and 13.

2010 30,035
2009 29,072
2008 20,230
2007 11,755
2006 7,036
2005 35,903
2004 26,480

I just thought I would make a general observation. Personal chapter 7 bankruptcies generally run very smoothly with no complications. Individuals can eliminate their debts and move on with their lives. But as a Fort Lauderdale bankruptcy attorney, I must emphasize that this is a court process and there is an obligation under penalties of perjury to tell the truth. And at some point, I just have to say what is fair is fair. Sometimes at the end of my bankruptcy free consultation, the prospective client discloses additional information. I have land free and clear in, for example, Costa Rica. I have $20,000 in a bank account, can I give it to my mother to hold for me? I just transfered my vehicle to my brother so creditors could not seize it. Can I deed my investment property to my sister? Whether the perspective is you don’t want to get caught, have your bankruptcy denied, or perhaps go to jail, or as a simple matter of ethics, full disclosure is required

Always provide full disclosure to your attorney. However, even though you currently have assets that are not exempt from creditors, there are legitimate techniques that can maximimize the use of the assets on your behalf. Pre-bankruptcy planning can include exemption planning and a review of necessary expenditures.