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  #1  
Old 10-17-2008, 05:41 AM
ReggieRHillJr
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Default I lost my auto to a payday loan. Can I deduct that on my taxes?

I live in Missouri.
I couldn't repay my payday loan so the company took my auto instead.
Can I deduct this loss on my income taxes?
  #2  
Old 10-17-2008, 07:08 AM
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I don't think you can. It wasn't a loss because you basically "sold it" to the finance company. In fact, if the debt is canceled by the repo, it could even be considered income to you. That would apply if the car was worth less than you owed on it. I would consult a tax adviser. Here is some info I found on the web:

[B]Foreclosures and Repossessions

A foreclosure or repossession of property on which you have a debt is treated as a sale or exchange for income tax purposes. You may realize a gain or loss on the foreclosure or repossession. This is determined the same way as for a sale or exchange – the difference between the amount realized and your adjusted basis in the property.

Cancellation of Debt

In the case of a foreclosure or repossession, the amount realized is the debt that is canceled. Part of the amount realized may constitute ordinary income, rather than gain or loss on the foreclosure or repossession. If the amount of debt that is canceled is more than the fair market value of the property, and you are personally liable for the loan (a recourse loan), the difference is ordinary income, subject to the normal income tax rate that applies in your case. If you are not personally liable for the debt (non-recourse loan), you do not have any ordinary income from the cancellation of the debt.[/B
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Old 10-17-2008, 08:17 AM
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Pretty sure this posting is from a spam "bot".....
  #4  
Old 10-17-2008, 09:25 AM
Dr. Righteous Dr. Righteous is offline
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I really wish the pay day loan, and the check cashing parlors, would be made illegal in my state as well as the title loan places. Rip-off loan companies that do precomputed interest loans are illegal in a lot of states.

I have friends that owns a chain of check cashing stores and they are getting rich. It may be legal but I still think it is taking advantage of people.
I understand that the customers are ones that sometimes cannot even get a checking account because of writing bad checks. BUT still, it isn't ethical.
It is "providing a service" Well, you can look at euthanasia and abortion the same way.
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Old 10-17-2008, 09:25 AM
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Let's see if he responds. His "back door" info seems legit.
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Old 10-17-2008, 04:08 PM
dgc333 dgc333 is offline
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I guess I have lived a sheltered life. What the heck is a "payday loan"?
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Old 10-17-2008, 04:09 PM
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I don't know..... My "spidey" senses are tingling on this one. His occupation and vehicule info are all screwed up, his posting is vague and not what you'd expect from a first time poster. These "bots" are getting pretty sophisticated.
  #8  
Old 10-17-2008, 04:11 PM
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Quote:
Originally Posted by dgc333 View Post
I guess I have lived a sheltered life. What the heck is a "payday loan"?
Well, you know how everybody always had a buddy they could count on to spot them a 20 until payday? Well now, some people are doing that professionally. Plus interest, of course. And sometimes the interest is 20 or 30%.
  #9  
Old 10-17-2008, 04:27 PM
dgc333 dgc333 is offline
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OH!!

You would think that someone borrowing enough money where a car for collateral is warranted and earns enough to expect to be able to pay back the loan at their next pay day would be able to borrow the money through more traditional means!

Sounds to me like some one with a drinking, drug or gambling problem and I can't imagine someone like that worrying about whether they can claim their loss at tax time.

I agree something fishy!
  #10  
Old 10-17-2008, 04:58 PM
Walkercolt Walkercolt is offline
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"Payday" loans are like an advance on your paycheck. The interest rates are usually 99.98% per annum. "Check advances" are they hold your personal check and you pay 20% interest per week until you pay the interest and check off...kinda like a pawn shop. As long as they disclose the ARP, in all but 5 states, any interest rate goes. You may even have to pay the interest "up-front" in most states. Loan sharks with offices is all they are. Most places also will cash payroll checks for 5%, and pay your utilities bills for a fee. And if you don't pay-up, well, let's just say you BETTER pay on time if you like to drive or walk normally. The "penalties" for late/missed payments can be unbelievable...like 200% of the original amount or even more.
  #11  
Old 10-17-2008, 05:07 PM
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Quote:
Originally Posted by dgc333 View Post
OH!!

You would think that someone borrowing enough money where a car for collateral is warranted and earns enough to expect to be able to pay back the loan at their next pay day would be able to borrow the money through more traditional means!

Sounds to me like some one with a drinking, drug or gambling problem and I can't imagine someone like that worrying about whether they can claim their loss at tax time.

I agree something fishy!
Payday loans are geared toward those who can't get a bank loan. There are many of those places in NH. They advertise "Title Loans, Keep Your Car." All is well if you pay back the loan when agreed. If you don't, they grab the car. Often times they ask for a set of car keys when you get the money. It is the closest thing to loan sharking that is legal.

There are people who really benefit from these payday loans. They generally just run out of cash before the next paycheck and are willing to pay the interest for a few hundred bucks to tide them over. The problem is, many end up being repeat borrowers who can never escape the financial cesspool they are wading in.
  #12  
Old 10-18-2008, 03:39 AM
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i know everyone at one time or another has had some kind of financial problems or needs.....but i personally will not use one of these businesses....that's what they are. i grew up in a very impoverished home with both parents alcoholics and would be gone up to a week at a time leaving me and my 2 sisters and 3 brothers to fend for ourselves. we, as young kids had to find some way to make money to buy just the bare necessities to survive...and most of the time we either stole food from a grocery store or looked for bottles and cans to turn in for money. i believe people, most of the time, aren't willing to find another source of income to take care of their financial situations, it's just "easier" to go to one of these businesses and "borrow" money. you can't really blame the businesses...this is america after all and it is free enterprise. just my small two cents on the subject.......i'm not "downing" anyone....just giving my thoughts
  #13  
Old 10-21-2008, 05:41 AM
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Biggrin

Quote:
Originally Posted by Madman Stephan View Post
Pretty sure this posting is from a spam "bot".....

Quote:
Originally Posted by Dick View Post
Let's see if he responds. His "back door" info seems legit.
I think Madman just night be right on this one.

http://www.moparchat.com/forums/showthread.php?t=112887
  #14  
Old 10-21-2008, 09:21 AM
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Biggrin

Yes, it turns out he was. It was either a smart bot or a dumb individual. Either way, he/it is banned. The other thread has been deleted.
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