Advice on payday loan pay off - The Bills.com Blog

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Advice on payday loan pay off

Question: I have payday loans that I am struggling to pay. I have tried to make payment arrangements with them and the are not willing to work with me. One of them has refused to stop trying to electronically get the money from my checking account even thought I have asked them repeatedly. What can I do in this situation?

Also do you know of anyway company thatwill help me consolidate them and help me work with them to get them paid off? Thank You

Answer: Thanks for your question. You can always apply for a debt consolidation service - if you want a free debt consultation with one of Bill's approved debt help partners, click here: http://www.bills.com/debthelp/debt/

As far as getting them to stop electronically hitting your bank account, you can literally walk in to your bank and request that a ?stop? be placed on all drafts to that company.

Here is some more info on payday loans and what you can do:

These small loans, also called ?cash advance loans?, ?check advance loans?, or ?deferred deposit check loans?, are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. With rates so high and the term of the loan so short, there?s no wonder that a very high percentage of these loans are rolled over by the borrower again and again so that the accumulated fees equal an effective annualized interest rate of 390% to 780% APR depending on the number of times the principal is rolled over.

You ask in your question if there are any solutions to assist you with resolving your payday loans. Unfortunately, most debt resolution and credit counseling firms are unable to assist consumers with payday loans because the loan balances increase so quickly. Because of the high interest rates and fees associated with these loans, these accounts grow so quickly

that debt resolution companies are unable to resolve them. A credit counseling agency may be able to assist you by providing budgeting advice, but generally payday loans cannot be entered into a debt management plan. Debt settlement firms generally cannot settle with payday lenders because these debts grow too quickly for the firms to be able to settle at a reasonable rate. Most consumers find that they must find a way to resolve their payday loans without professional assistance. However, there are options available, as I will describe below

You can get out of this trap if you are a resident of one of the twelve states where this type of loan is illegal once the effective rate passes the usury cap in that state. Usury laws dictate the maximum interest that many lenders may legally charge. If the payday lenders follow their normal business model the loan will most assuredly pass the limit very early. New York State even has a criminal statute that sanctions the lender if the rate exceeds 25%. If you are in one of those states, the loan may be void, and you may be only liable for the principal amount borrowed. In addition, there are eight states whose payday loan regulating statutes require lenders to set up an installment repayment plan if an account reaches the maximum number of rollovers allowed by law and the debtor declares that he/she is unable to pay the balance due. Such a repayment plan may help you in paying off these loans. You can find a summary of your state?s pay day loan statutes at

target="_blank">www.paydayloaninfo.org a website developed by the Consumer Federation of America. If you go to the same site and click on consumer help, you will find a comprehensive discussion of the best strategies of how to cope with and get out of the payday loan trap.

If you do not live in one of the states whose payday loan regulations favor consumers, the best solution would be for you to borrow the funds needed to repay these loans from a conventional lender or a family member or friend. Converting your payday loans to a conventional loan should allow you to repay the loans within a reasonable time frame and at a reasonable interest rate. If you cannot borrow the funds to repay the payday loans, you may want to make a payment each month to pay down the balances. In some states, the interest on the loans will prevent you from effectively repaying the debts in monthly installments; if you find that to be the case, you should contact the payday lender to try to work out repayment terms that will work with your budget. Hopefully, one of these options will work out for you so these loans do not go into default.

Bills.com offers a wealth of information about payday loans on our Payday Loan Information page, available at http://www.bills.com/payday-loans/

I wish you the best of luck in repaying these payday loans. I hope this information helps you Find. Learn. Save.

Best,
Bill
www.bills.com

Also, make sure to get a free financial health check-up with Bills IQ!

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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