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Payday Loan Mess - The Bills.com Blog
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Payday Loan Mess
Wednesday, Aug 12, 2009
Question: I need help with payday check cashing. My husband and I have sufficient income, however, we got into a check cashing mess and can't get a loan to stop. Can you help?
Answer: I'm sorry to hear of your predicament. Unfortunately, your situation is not all that uncommon these days, as more and more financially struggling consumers -- with little or no cash and who have been denied credit by banks and other lending institutions -- turn to high-cost, short-term "payday" loans (also known as "cash advances") when they find themselves hard pressed for cash.While payday lenders argue that they offer an important resource to consumers, critics argue that payday lenders are nothing more than predatory loan sharks that use triple-digit interest rates (typically 400% annual interest (APR) or more!), unaffordable repayment terms, and coercive collection tactics to trap people in financially disastrous cycle.
To give you an idea as to the danger presented by payday loans, consider this: they are illegal in fifteen states and the District of Columbia. And in the state of Georgia, payday lending is considered criminal
racketeering and is a felony!
My first suggestion is to learn more about payday loans and the laws regarding them in your state. As for rectifying your current situation -- you should seriously consider approaching those who are close, trusted people in your life (friends, family, neighbors, maybe your employer) and ask to borrow the funds required to pay off your payday loans, while simultaneously looking for any possibilities for additional/overtime work.
In the future, keep in mind that credit union loans, paycheck cash advances from employers, cash advances from credit cards, emergency community assistance plans, and direct loans from family or friends -- are typically better financial options than a payday loan. The
My first suggestion is to learn more about payday loans and the laws regarding them in your state. As for rectifying your current situation -- you should seriously consider approaching those who are close, trusted people in your life (friends, family, neighbors, maybe your employer) and ask to borrow the funds required to pay off your payday loans, while simultaneously looking for any possibilities for additional/overtime work.
In the future, keep in mind that credit union loans, paycheck cash advances from employers, cash advances from credit cards, emergency community assistance plans, and direct loans from family or friends -- are typically better financial options than a payday loan. The
Federal Trade Commission also has a great information regarding payday loan alternatives .
One final, slightly light-hearted, fact regarding payday loans: Wikipedia.org, the leading online encyclopedia, list payday lending under "Loan Shark," stating that "if the defining characteristics of loan sharking are high interest rates and a credit product that traps debtors, then the label certainly applies." Visit Wikipedia to read more about loan sharks and payday lending .
Bills.com also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in Massachusetts , Florida , Texas , Illinois , and California .
Best of luck with this difficult financial situation, and I hope that the information I have provided helps you Find. Learn. Save.
Regards,
Bill
www.bills.com/blog/
One final, slightly light-hearted, fact regarding payday loans: Wikipedia.org, the leading online encyclopedia, list payday lending under "Loan Shark," stating that "if the defining characteristics of loan sharking are high interest rates and a credit product that traps debtors, then the label certainly applies." Visit Wikipedia to read more about loan sharks and payday lending .
Bills.com also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in Massachusetts , Florida , Texas , Illinois , and California .
Best of luck with this difficult financial situation, and I hope that the information I have provided helps you Find. Learn. Save.
Regards,
Bill
www.bills.com/blog/
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by cleste on Tuesday 15th September 2009 11:09
I am stuck in the payday loan trap. I would like to consolidate all of them. Also I have really bad credit and would like to consolidate all bills to one. Can you help me with that?
2. Posted by Bill on Tuesday 15th September 2009 13:34
This is an all-too-common question, unfortunately. Short answer: it is going to take some work, and a loan is probably not the answer. See my answer to another reader How to Break Free From the Payday Loan Trap to learn, well, how to break free from the payday loan trap.
3. Posted by Summer on Tuesday 20th October 2009 12:28
I had a payday loan in 2008. At that time I had to write 3 payment checks that total the amount owed. These 3 checks were turned over to 3 different collection agencies and there is no way I can pay them or the fees. I am unemployed and NO income but one of the collection agencies said/wrote that they will take me to court and sue. What can I do or should I just ignore calls and letters.
4. Posted by Bill on Tuesday 20th October 2009 13:16
Debt related to a payday loan is unsecured. In the eyes of the law, a payday loan debt is no different than a credit card debt, or a deficiency balance from a repossession, or a medical debt. Therefore, I want you to read two of my recent answers to other readers who had similar questions regarding unsecured debt. First, read "Collections Advice." This will help you understand your rights as a consumer. Just because you are in debt does not mean you lost your rights. Second, read "How to Break Free From the Payday Loan Trap" to learn, well, how to break free from the payday loan trap. One last thought -- do not believe legal advice offered by debt collectors. The legal advice many debt collectors tell debtors is usually incomplete or wrong, and is always self-serving.