Many New York bankruptcy debtors take out payday loans to cover costs before receiving their actual paychecks. I’ve written about these types of loans frequently, particularly the Consumer Financial Protection Bureau’s attempts to limit them from becoming “debt traps.”Aside from driving debtors into bankruptcy, another place where payday loans can intersect with bankruptcy is when. Payday Loans and Bankruptcy. Payday loans can seem like an attractive option if you are struggling financially to make ends meet. However, getting quick money now can lead to substantial financial challenges later on, including being charged with possible fraud if you make the decision to file for bankruptcy. “Payday loans” are dischargeable in either a Chapter 7 or Chapter 13 bankruptcy. For those who have never been desperate enough to take out a payday loan, stay away from them. These are small, short-term, high-interest loans that typically come due on your next payday. If you are struggling with payday loans, you may be able to find some relief by filing bankruptcy. Payday loans are unsecured loans obtained through a variety of sources. Individuals often reach towards these loans for a fast and seemingly easy way to get funds, but interest rates are very high, and the repayment is quite difficult. In the case of Pay Day loans, the general rule of thumb is that any loans for more than $750.00 and that were taken out within 70 days before the bankruptcy are considered fraudulent. Any debts that are determined to be fraudulent by the bankruptcy court are generally non-dischargeable and cannot be included in a bankruptcy settlement. Payday lenders that challenge the discharge of payday loan debt are often unsuccessful in bankruptcy court. Many bankruptcy courts don’t look favorably upon payday lending practices and require the payday lender to prove that you acted with fraudulent intent. Was there fraudulent intent?