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Bad Credit Cash Advance And Bankruptcy Issues

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by: No more debt !
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Date: Fri, 17 Jun 2011 Time: 11:07 PM

According to reports, more than ten million Americans avail of bad credit cash advances each year. In fact, these loans are so popular that it is believed that payday lenders have more stores in the US than McDonalds!

A bad credit cash advance is not meant to offer long term financial succor to its beneficiaries. Instead, these are high risk, very short term loans that are expected to offer backup in case of sudden and unforeseen emergencies, when money needs to be available within a few hours. A hospital admission or sudden car repair bills are examples of such emergencies. In such cases, bad credit cash advance fulfills the borrower's immediate needs while enabling him or her to avoid costly interest charges and avoidable delay.

The bad credit cash advance is so called because it is available even for those people with bad credit. Conventional loans check the credit history of the borrower before sanctioning the loan. Therefore, loans like credit card loans are available only to some people. However, bad credit cash advance may be availed even by those who have bad credits.

Can people who have filed for bankruptcy avail of bad credit cash advance?

They most certainly can. This is because loan companies do not check the credit history of applicants before sanctioning the loan. In short, bankruptcy is not a factor while taking these loans. In fact, bad credit cash advance is a loan that offers help even to people with bad credit histories, at short notice.

Can bad credit cash advance lead to bankruptcy?

In recent years, bad credit cash advance has been the butt of a lot of criticism. There have been reports that suggest that availing of payday loans could lead to greater risk of bankruptcy in the long term.

It is true that loans of any kind could take borrowers that much closer to bankruptcy as loans have to be repaid with interest and other charges. In the case of bad credit payday advances, the stress is a little more as interest rates are high and charges on renewals are generally high too. The high interest rates associated with these loans add to the financial burden. So, even small loans could place high stress on consumers who are already financially stressed. Besides, many people who avail of payday loans take out multiple loans. Also, some borrowers are in the habit of multiple extensions of payday loans. In such cases, these borrowers are expected to pay off the cumulative interest burden that is simply too high. In such circumstances, payday loans can lead to financial disaster.

That said, it must be remembered that bad credit cash advances are short term loans are meant to help borrowers cope with financial shocks that arise between paychecks. Thus, short term payday loans should have a medium term effect on the borrower's finances. Because these are short term loans, borrowers must make it a priority to close these loans within the stipulated time. In such cases, these loans can help people who are hard pressed for money.

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Thus, it cannot be said that bad credit cash advance impact the long term finances of borrowers or lead them to bankruptcy unless these loans are availed of unnecessarily and for purposes that they were not intended for.

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