BILL'S ANSWER
You need a plan for spending, a plan for increasing your income, and a plan to deal with your debt.
Now is a good time to learn more about payday loans, also called "cash advance loans," "check advance loans," or "deferred deposit check loans." The fees are tremendous, and vary from $15 to $30 per $100 borrowed. With rates so high and the terms so short, it's not surprising that a high percentage of these loans are rolled over by the borrower so that the fees equal an annualized interest rate is 390% to 780% APR, depending on the number of times the principal is rolled over. Remember that payday loans are illegal in some states!
If you are about to default on these loans you should understand the implications of a default. Read the following blog entry: Advice on payday loans and default This page also explains your rights when the collections process begins.
Talk to your banker now about closing your checking account to get control of your loan payments and stop Non-Sufficient Funds (NSF) fees. If your bank closes your account due to repeated overdrafts, you may be placed on a list that will make it hard to get a checking account for five years.
Eight states regulate payday lenders and require them 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. Check out the payday loan information from the Consumer Federation of America where you will be able to read all about these loans and the various state attempts to regulate them. Follow the "state information" link to find out the specific regulations for payday lenders in your state, and if you live in one of the eight states requiring installment payments. If your state does require repayment plans, and the lender still won't accept payments, call your state regulator of payday loans, usually an assistant Attorney General, and complain. You should get the results you want after the Attorney General's office becomes involved.
If you are not in one of those states, you may want to consider simply making payments to the lender of whatever you can afford to pay down the balance of the loan over time. In most states, the rollover limit will soon be reached, and the interest rate the lender can charge will be capped by state law. If the lender will not accept your payments, simply put what you can afford aside each month until you have enough money to either pay off the loan or to offer a settlement. Read up on the regulations in your state to find the best strategy for your situation.
Bills.com also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in California, Florida, Illinois, Massachusetts, Missouri, Texas, and Virginia.
If you do not repay a payday loan, the payday loan company has several legal remedies, including wage garnishment, levy, and lien. See the Bills.com resource Collections Advice to learn more about the rights of creditors and debtors.
Next, you need to address spending. Find ways to control your out-flow. Put a priority on your expenses. Shelter, food, and clothing are vital, and any other spending should be curtailed. Make saving (not spending!) money your No. 1 priority by setting aside a small amount in an interest-bearing savings account with every paycheck.
Finally, everyone wants to earn more money. Further your education so that you can increase your value to employers in your area. Community colleges offer an excellent value, and many schedule evening classes for working students.
I wish you the best of luck in repaying these payday loans. Because you are aware you are caught in a trap, you can now find your way out. I hope this information helps you Find. Learn. Save.
Bill
Houston, TX | March 07, 2011
August 31, 2010
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