Payday Loan Mess

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 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 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.

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/