When you file a successful Chapter seven petition, the court will allow you to discharge all debts without repayment and all payday loans are considered as unsecured debts. The petitioner must however explicitly list the short term loan as an unsecured debt in the petition. As a court is unlikely to consider such a debt as a priority one, the chances of being allowed to discharge it are highly likely.
Under a chapter thirteen protection, the court usually requires the borrower to repay their debt obligations under a court structured plan. If the borrower prefers, they can include such a debt in their payment plan which will allow them to make repayments spread over a period of time. The only way to discharge such a debt under hardship provisions is if they are unable to complete the repayment plan.
It is important to know your rights before and after securing any form of payday loan. These lenders sometimes use subtle provisions to take advantage of unsuspecting borrowers. There are instances where lenders place as part of the terms a caveat that the loan given is not dischargeable as part of bankruptcy proceedings. This is a scare tactic as these debts are treated as other debts in such proceedings.
By law, any debt that was obtained within a period of ninety days before bankruptcy protection petition is filed is treated as non dischargeable. The logic behind this is that people are not supposed to take debts they have no intention of repaying. Courts are usually disposed to consider payday loans as usurious debts and if you have only renewed such a debt which you had taken at a date much earlier than three months, there is a good possibility that the court will inclined to treat it as a dischargeable debt.

You must read and understand clearly the fine prints in the loan agreement, as during certain specific conditions, banks reserve the right to modify the interest rates of your loan. Defaults in loan repayments falls under such specific conditions payday loans online written on the agreement.