People who suffer from financial challenges may be tempted to pay their bills through the quick fix of a payday loan. This type of loan can look particularly attractive to people after a personal bankruptcy, when it can be difficult for a while to get approved for credit. However, payday loans can be a dangerous financial trap, especially for Oregon residents who are putting their lives back together after a Chapter 7 or Chapter 13 bankruptcy.

Payday loans are usually easy-to-get, small short-term loans that can help a person through a minor financial emergency, such as an unexpected car repair or a grocery purchase. According to the National Association of Consumer Credit Administrators, payday loans come with high interest rates: usually about $15 for every $100 borrowed. That may not seem like much, but annually this interest rate comes out to 391.07 percent – compared to typical credit cards rates of about 15 percent. People who continually rely on payday loans to get them from one paycheck to another end up paying staggering interest rates and have difficulty paying off the loan.

Also, many consumers face abuse from payday lenders, states The New York Times. Payday loan customers have reported illegal creditor harassment against online lenders in about one third of complaints to the Better Business Bureau. These harassment tactics include threats to visit customers’ places of employment, to contact their friends or to have them arrested if they don’t repay their loans. Recently, two groups of payday loan companies were accused of electronically deducting funds from the bank accounts of people who were shopping around for loans online and had not authorized them to make any loans.

When recovering from financial challenges, it is important to understand the difference between wise credit decisions and those that can put consumers back into another financial mess.