You’re a few days away from payday, your checking account is low, and you just need a little help to make it through the week. That’s when many Tennessee residents turn to money apps like Dave, MoneyLion, Brigit, or Earnin for small cash advances. At first, these apps can feel like a lifesaver—but over time, the fees, automatic repayments, and repeated borrowing can create a cycle that feels impossible to escape.
If you’re struggling with app-based loans, it’s natural to wonder: Can bankruptcy help? The short answer is yes—but there are important details to understand before you file.
What These Apps Actually Cost
These companies love saying they don’t charge interest. And technically? They’re not lying. But they’re not being completely honest either.
Instead of interest, you get hit with monthly subscription fees—anywhere from $1 to $20. Want your money right away instead of waiting a few days? That’s an “instant transfer fee.” And then there are those “optional” tips they encourage you to leave, often 10-20% of what you borrowed.
Add it all up, and you’re paying rates that look a lot like the payday loans these apps claim to replace.
The real trap, though, is the automatic repayment. On your next payday, the app pulls the money straight from your account—no asking, no waiting. If you don’t have enough to cover both the repayment and your regular bills, you get slammed with overdraft fees from your bank. Then you’re right back in the app, borrowing again just to stay afloat.
It’s exhausting. And you’re not imagining it—this cycle really is designed to keep you coming back.
How Bankruptcy Handles These Debts
Here’s the good news: bankruptcy law treats cash advances from these apps the same way it treats credit card debt or medical bills—as unsecured consumer debt.
Under federal law (11 U.S.C. § 727), these debts normally get wiped out when you receive your bankruptcy discharge. Gone. You don’t owe them anymore.
In a Chapter 7 bankruptcy, these debts typically disappear within four to six months of filing.
In a Chapter 13 bankruptcy, you’d repay a portion through your payment plan—sometimes just pennies on the dollar—and the rest gets discharged after you complete your three-to-five-year plan.
Sounds pretty straightforward, right?
It is, except for one rule that could complicate things.
The 70-Day Rule You Need to Know About
Federal bankruptcy law includes a provision designed to prevent fraud. Basically, Congress didn’t want people taking out cash advances with no intention of paying them back, then immediately filing bankruptcy.
Under 11 U.S.C. § 523(a)(2)(C), here’s what creates a problem:
If cash advances from a single creditor aggregate more than $1,250 within 70 days of filing bankruptcy, the law presumes those advances were fraudulent.
That presumption means the creditor doesn’t have to prove you intended to commit fraud—it’s automatically assumed. And that debt might survive your bankruptcy.
Let me give you an example:
- February 1: You get a $300 advance from MoneyLion
- February 20: Another $400 from MoneyLion
- March 10: One more for $600 from MoneyLion
- April 1: You file bankruptcy
Those three advances total $1,300 from one creditor within 70 days. MoneyLion could object to discharging that debt, claiming the presumption of fraud applies.
Now here’s the important part: the key phrase is “from one creditor.”
If you borrowed $500 from Dave and $500 from MoneyLion within those 70 days, you’d probably be fine. Neither individual creditor provided more than $1,250, so the presumption doesn’t kick in.
(These dollar amounts apply to cases filed between April 1, 2025, and March 31, 2028—they get adjusted for inflation every three years.)
Can You Overcome the Presumption?
Sometimes, yes.
The presumption isn’t an absolute bar—it just makes things harder. You can potentially prove you took out those advances in good faith, fully intending to repay them.
Courts look at your actual circumstances when you borrowed the money. They want to see if you had a reasonable expectation of being able to pay it back.
You might successfully argue good faith if:
- You had steady employment and income when you borrowed, but then got laid off unexpectedly or had your hours drastically cut
- You needed the money for real emergencies—medical bills, car repairs to get to work, preventing utilities from being shut off
- You weren’t thinking about bankruptcy when you took the advances; that only came up later after your situation got worse
- You kept paying your other bills after taking the advances, showing you weren’t planning to default on everything
Courts are way less sympathetic if:
- You’d already talked to a bankruptcy lawyer before taking out the advances
- You’d already stopped paying other creditors
- You had no realistic way to repay the money when you borrowed it
Bottom line: the timing and circumstances matter a lot.
Does Timing Your Bankruptcy Filing Matter?
Absolutely. And this might be the simplest solution to the whole problem.
If you wait at least 70 days after your last cash advance before filing bankruptcy, the presumption disappears.
Just gone. Creditors have a much harder time challenging your discharge at that point.
Sometimes you can’t wait, though. Maybe foreclosure is looming, or you’re about to get garnished, or there’s a lawsuit judgment coming down. In those situations, you file now and deal with any creditor objections if they come up. Your lawyer can help prepare your defense.
But if you’re not facing an immediate emergency? Waiting those 70 days can save you a lot of headaches.
Will These Companies Actually Fight You?
Honestly? Most don’t.
Filing an objection requires hiring a lawyer, filing an adversary proceeding (basically a lawsuit within your bankruptcy case), gathering evidence, going to court. All of that costs money—often more than what you actually owe them.
Plus, these cases are tough to win unless the fraud is obvious.
And finally, most of these companies recognize their customers are in genuine financial distress. They’re not heartless villains twirling mustaches. They just want to get paid if possible.
That said, don’t assume they won’t object. Larger amounts and very recent advances—especially within days of filing—are more likely to get scrutinized. Your bankruptcy attorney will review your specific situation and tell you honestly what risks you’re facing.
Chapter 7 or Chapter 13: Which Makes Sense?
Most people in Tennessee with primarily unsecured debt file Chapter 7. It’s faster (four to six months total), and your qualifying debts get completely wiped out.
To qualify for Chapter 7, your household income needs to be below Tennessee’s median for your household size, or you need to pass the “means test” showing you lack disposable income to repay creditors.
Tennessee doesn’t let you choose federal bankruptcy exemptions—you have to use state exemptions. The good news? Tennessee’s exemptions got a lot better on January 1, 2022:
- Homestead exemption: $35,000 for individuals, $52,500 for married couples filing jointly
- Wildcard exemption: $10,000 that can protect any type of personal property
Before 2022, these exemptions were only $5,000 and $7,500—so this was a significant improvement. Your lawyer will help you use these exemptions strategically to protect your assets.
Chapter 13 makes more sense if:
- You have recent cash advances that would cause problems in Chapter 7, and you can’t wait the 70 days
- You have equity in your home or other assets that exceed Tennessee’s exemptions
- You’re behind on your mortgage or car payments and need time to catch up while keeping the property
- Your income is too high to qualify for Chapter 7
- Your debts fall within Chapter 13’s limits: secured debts under $1,395,875 and unsecured debts under $465,275 (amounts that apply to cases filed on or after April 1, 2025)
Chapter 13 lets you pay back a portion of your debts through a structured plan, then discharges whatever’s left after you complete it. It’s not as quick as Chapter 7, but it can solve problems that Chapter 7 can’t.
What to Do Right Now
If you’re seriously considering bankruptcy to get out from under cash advance debt and other bills, here’s what you should do:
Stop using the apps immediately. Taking out new advances while you’re planning bankruptcy looks terrible. Just don’t do it.
Figure out your 70-day window. Write down when you took your last advance from each app. If it’s been less than 70 days and you’re not facing an emergency requiring immediate filing, consider waiting.
Gather your documents. You’ll need bank statements, pay stubs, tax returns, and records of all your debts. Get organized now so you’re ready.
Take the required credit counseling. Federal law requires you to complete a credit counseling course from an approved provider within 180 days before filing. It’s not optional.
Talk to a bankruptcy lawyer. This is the most important step. Every situation is different, and you need someone who can look at your specific circumstances and tell you what makes sense for you.
The consultation is free. You’ve got nothing to lose by finding out where you stand.
A Fresh Start Is Possible
Look, bankruptcy exists for a reason. Congress created these protections specifically for people like you—people who work hard, play by the rules, but got overwhelmed by circumstances beyond their control.
This isn’t about moral failure. It’s about using the legal tools that are available to you.
We’ve helped many people in the Chattanooga area break free from debt that was crushing them. We know Tennessee bankruptcy law inside and out, and we’re not here to judge you. We’re here to help you figure out the best path forward and then walk that path with you.
You don’t have to live with this weight on your shoulders anymore. Those cash advance apps might have seemed like a lifeline at first, but now they’re just one more thing dragging you down. Bankruptcy can wipe them out and give you room to breathe again.
Ready to take the first step? Contact our office today for a free consultation. Let’s talk about your situation, answer your questions, and figure out how bankruptcy can help you get your financial life back on track.
You deserve a fresh start. Let us help you claim it.
