Yes. You can list your payday loan in bankruptcy.
To be honest, you can list everything in bankruptcy. Some debts, like priority debts (government type debts such as child support/criminal restitution/student loans/taxes) are generally not discharged in bankruptcy. Payday loans are NOT priority debts.
Most people are nervous to list payday loans in bankruptcy because they took them out recently and even worse, they signed a contractual provision as part of the payday loan that they could not file bankruptcy on that loan. As for that contractual prohibition against going bankrupt, it’s invalid. I can cancel any contract as part of your bankruptcy, including that contract that says you cannot go bankrupt.
The timing on when you took out the payday loan does get a little more problematic. In theory, if you take out a loan within 90 days of filing bankruptcy (or a cash advance within 70 days prior to filing bankruptcy), that debt can be presumed to be nondischargeable. This means that if the creditor files an adversary proceeding (bankruptcy court law suit) against you based on that recent debt, he’ll win and you’ll have to pay it back, plus his attorney’s fees.
In reality, those adversary proceeding suits are very rare. They do happen, and if you do get sued on a recent payday loan listed in your bk, plan on making arrangement to pay it back. I once filed a case for a gentleman who took out 4 $600 payday loans from 4 different Check City locations in Utah all on the same day, and then he filed bankruptcy with me that afternoon. I did not know that he had done this, and he sure didn’t volunteer it. About a week after his bk was filed, I received a friendly call from a Ms. Roman, general counsel for Check City, who explained the situation. I confronted my client, he denied it, they sued, and he lost.
The 90 day/70 rule comes from the Bankruptcy Code. 11 U.S. Code § 523 lists a number of exceptions to discharge, or situations where you be sued and your debts deemed nondischargeable. It reads, in part:
(a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt—
(1) for a tax or a customs duty—
(A) of the kind and for the periods specified in section 507 (a)(3) or 507 (a)(8) of this title, whether or not a claim for such tax was filed or allowed;
(B) with respect to which a return, or equivalent report or notice, if required—
(i) was not filed or given; or
(ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or
(C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax;
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(i) for purposes of subparagraph (A)—
(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and
(II) cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable