Posts Tagged ‘payday loan debt’

Choosing Consolidation Over Bankruptcy

Written by David Schmidt. Posted in debt

There are a lot of people who think that it is so simple to get rid of their payday loans with a simple bankruptcy agreement. In general, this is something that must be carefully considered and one that can cost people a lot of money over the long term. More importantly, for some of the poorer people who decide to opt for bankruptcy, it is a method that prevents them from having any kind of future in borrowing in most situations. No creditor, not even a payday loan company, wants to provide the money to someone who just decides to get bankruptcy protection every time the debt burden gets too large.

When it comes to options for a person with too much payday loan debt, it is a good idea to choose consolidation over any other method. There are a few reasons why a payday loan consolidation might be in order for your dues. The first reason is if you are trying to borrow money at some other point in your life. As you will see, getting money is going to require some credit and bankruptcy can ruin that for a long time. Families that have children and have emergencies need to be able to get the loan money they need.

Consolidation Process for Payday Loans

A lot of people who go through the payday loan trap find that they need help at some point towards the end. After paying for a few of the different interest rate payments and getting stuck with some of the other issues, it is hard to continue paying for the amount that the payday lenders are asking. In many situations it is then easy to consider bankruptcy, but this is not a good option for anyone that wants to maintain any semblance of credit.

Instead, it is a lot better for you to look for options like payday loan consolidation. By getting loans consolidated, it is possible to pay them all to one single place with a lower interest rate over a longer period of time. This can typically be useful for people that have many loans to many different places and need the help of a professional to get rid of the debt for them.

The consolidation experts often have time in the industry already, which is why many of them are so eager to help you out. They have put in their time to the industry and they know how hard it can be to get the things done that you are looking for. I general terms, they are people that know the industry inside and out and didn’t really like how they were treating people!

With their connections, you can actually get rid of your payday loan debt and even if it takes a while, you will have paid a lot less overall. It will also be fine for most people to get a loan afterwards if there is an emergency and payment is needed at a slower rate.

Either way, consolidating payday loans is a much better way of doing things than the method of bankruptcy which can cost you down the line.

Payday Loan Debt and Tambu’s Story

Written by David Schmidt. Posted in Payday Loan Debt

A Story about payday loan debt

Many of our clients are single moms who are just trying to make ends meet.

There are millions of people who suffer with payday loan debt every single day. The New Yorker recently did a piece on a typical woman who utilized these loans and has found it incredibly difficult to maintain. Her name is Azlinah Tambu and she is a 22 year old single mother who is living in Oakland California.

Finding herself in a tough situation, Tambu had to take five payday loans from five different lenders so that she could fix her car. This is a typical story that occurs to so many people in the country and it is something that many legislators are worried about.

Tight Spot for Payday Debtors

Tambu was in an incredibly tight spot because she needed her car fixed in order to get to work and drop off her child at the daycare. She knew that there would be many difficulties in paying off the payday loans because she needed her actual paycheck to pay for rent and utilities. Unfortunately, she was not anticipating the type of trouble that she was going to have with these lenders.

In the state of California, there is no legal “roll over” where a lender can refinance loans. Tambu had to pay back the first loans, but she then needed to take out more money from the same lenders and incurred even more fees. Lenders tried to withdraw money from her checking account, but she had almost nothing that they could take. When they tried, she over drafted and was charged with over $300 in overdraft fees.

The account fees were quickly paid and she closed the bank account. She is still struggling to pay off the lenders that helped her with the car.

This is exactly what many people in the industry are trying to do because they can gain so much from them. At the end of the day, it is important to remember that the people who are struggling with these loans are not only being taken advantage of in certain situations, but they are also having their life completely ruined.

For a single mother taking care of a child at the age of 22, it is arguably exploitation to have payday loans with such outrageous fees. Although $15 is not really all that expensive for every $100 borrowed, it can still add up to a lot with 15% interest every few weeks.

Tambu’s Aftermath

Unfortunately, the story for Tambu has not gotten any better. She visits all 5 payday lenders to provide approximately $40 to each in order. When asked whether they should be illegal, she quickly responded that they should not. In fact, she is working so hard to pay them off so that she can utilize them later on if needed.

At the end of the day, it is very important for some of these people to be able to get their hands on money even if it is not in their best interest. But you have to make sure you can pay these back quickly.

How to Handle Loan Sharking

Written by David Schmidt. Posted in Payday Loan Debt

dealing with loan sharks

Dealing with loan sharks can be so stressful

A lot of people who end up in payday loan debt do not realize that there are things one can do to protect themselves from being accosted by loan sharks. Even though the payday loan industry does not enjoy the term loan sharking, it is true that they actually work within a framework that can be considered very similar to such a description.

It is in your best interest to know how to prevent loan sharking and handle these debt collectors as best as you can. Using the following article, you should be able to handle loan sharking in a much better way and prevent yourself from running into problems down the line.

Loan Sharking Legal Protection

What a lot of people do not realize is that there are many legal actions one can take to prevent people from harassing them about outstanding debt too much. One of things that people can do is to speak with law enforcement if there is any kind of threats being made. If there are no assets that have been put up for your payday loans (which is usually the case), then there is nothing a payday loan company can do in order to force you to pay.

Not only should you not listen to these threats, but you should seek legal counsel as well. Given the psychological impact of the fear associated with these threats, it is a good idea for you to consider speaking with someone who can protect you and maybe even help to prevent it from happening in the future. You can also seek help on the FTC’s website or your local attorney general office.

Paying Debts with Consolidation

A lot of times it is one thing to be harassed in an illegal way and another to just have a constant stress of debt that must be paid. In some situations you can help yourself out by just speaking with a payday loan consolidation company about getting help to improve finances. One way of doing this is to get a payday loan consolidation expert who has the contacts and the knowledge to get a lower rate on your bill and help you out in many other ways.

Most of the time, you will find that payday loan consolidation is a great way of handling debt without causing a lot of problems. By far the most important thing for you to consider is a method where you are actually able to handle the debt burden in a much more consistent and easy manner. Then you can utilize your paycheck to pay off a lower interest rate and get the debt off the balance sheet.

Most people do not realize the implications of a high debt burden on credit and other things that can happen. If you are struggling to find out methods where you can pay off your debt and avoid a loan shark, getting a consolidation of some sort is definitely a good way of going about things.

Credit Card and Payday Loan Debt

Written by David Schmidt. Posted in Payday Loan Debt

Payday loans are at an all-time high because of the economic crisis that has hit the world. Cheap credit is no longer an option for many people, which is why payday loans are becoming so popular. Nonetheless, there are alternative options to payday loans. Credit card debt is certainly not a positive thing, but when compared to payday loans, it might not be so bad. Here is a short rundown of why credit card debt may be a better alternative for you than getting further in payday loan debt.

Annualized Percentage Rate for Payday Loan Debt

The average annualized percentage rate (APR) for payday loan debt is upwards of 390-780%. When you need money to feed your family, this doesn’t really matter. It is totally understandable that you would want to spend the extra money in order to feed and clothe your family.

Nonetheless, the APR rate for credit cards is far lower. On average credit card companies charge 7-26% due to a number of legal restrictions. The difference between credit cards and payday loan debt is immense. There may be limits on credit cards, but that is certainly a better option than payday loan debt.

Default Rates with Payday Loan Debt

The difference in default rates between payday loans and credit cards is also large. If you cannot pay dues because you are late paying another creditor, then the universal default APR rage applies to credit cards. That means that they cannot charge more than a specific percentage if you are late.

However, if you have not yet consolidated payday loans, then you are not subject to these default rates. You could be forced to still pay hundreds of percentage points in interest.

Other Problems if you Don’t Consolidate Payday Loans

If you do not consolidate payday loans then there are a number of other problems that are far worse than credit cards. With credit cards there is a way to improve your credit by paying off your loans. No such thing exists with payday loans. Your credit rating will be unaffected even if you work diligently to get payday loan debt help.

Choose What is Best for You

Some people just don’t want to deal with the hassles and legalities that come with credit cards. If you would prefer to get a smaller amount of money from a local payday loan lender, that is your prerogative. Nonetheless, you should be aware that your life could be made a lot more difficult because it is so under regulated.

If you already need payday loan debt help, please let us know so that we can help you extricate yourself from the situation as soon as possible. We will walk you through our steps to get you out of debt. When you are debt free, however, make sure that you do not fall into the same traps. Use credit cards rather than payday loans if you absolutely have to incur debt in order to feed your family. We’re here to help you!

Avoiding Payday Loan Debt

Written by David Schmidt. Posted in Payday Loan Debt

We often advocate that our customers consolidate payday loan debt and begin the long arduous process of becoming debt free. But what do we do when we are finally finished paying off that debt? How can we make sure we do not fall into the same habits and mistakes that we made before? These are hard questions to answer, but we hope to offer a bit of guidance. Payday loan consolidation is difficult enough, but making your way back into the debt free world can be a challenge.

Know Payday Loan Laws

Knowledge is power when you are facing predatory money lenders. If you make sure to research the laws that protect you and your family, then you can avoid some of the pitfalls that previously plagued you. Many laws in your region may actually work in favor of the money lenders simply because they have a much larger lobbying presence than you do. If you are not aware of your rights and the legal loopholes that they can exploit, then you will find yourself back into debt and struggling to consolidate once more. Going through payday loan debt once is enough – twice is too much!

Keep Track of Your Finances

In some cases the only reason payday loan debt accumulates is because you lack the understanding of your own finances. We have all been there. Every month it seems like plenty of money is entering the bank account, but somehow it never seems to be adequate enough.

In order to rectify the situation you must take a look at credit card statements, bank account information, and your bills in order to determine where the money is being siphoned. Perhaps you recognize that your kids borrow too much money for movies and snacks. Maybe your night out with the boys is costing too much. The only way to get your finances on track is to be knowledgeable about where money is coming and going.

Tightening the Belt to Avoid Payday Loan Debt

Once you determine where the debt is coming from, you can eradicate it with a few steps. It isn’t hard to determine where you can save money when the facts are staring at you in the face. After you determine how to save money and maintain a surplus of money you can avoid payday loan debt completely.

For many people, debt collects in numerous ways. As evidenced by the recent financial meltdown, many unqualified people “owned” their homes. In reality, these people paid expensive mortgages every month, which eradicated much of their monthly income. Without money to spend on food and other family items, families increasingly turned to predatory payday loan lenders. It may be hard to stomach, but rental properties will help you avoid this. Find a property that you can rent for well below your monthly earnings. Live within your means for a while and you will not get caught in the cycle of debt.

Follow these simple steps and you will hopefully have a much easier time avoiding payday loan debt the second time. You’ve experienced it once and there is no reason to do it again!

Use some of these great tips from Jerrie Guthrey to remain debt free:

Payday Loan Debt Help

Written by David Schmidt. Posted in Payday Loan Debt

Getting Payday Loan Help is a legitimate option for consumers who have too many payday loans. One must realize that using or getting payday loans can be a vital option when you need help for your short-term financial issues. It is wise though to make sure you understand the rates and fee structures before you get stuck with a loan you can’t pay back or end up taking other loans to pay off your existing loans. Here are some points that you should keep in mind when taking out these loans.

Payday Loans Should Only Be Utilized As “Short Term Loans”

You must understand that getting these payday loans are quite easy, but are there to be used only to meet your short-term financial issues. Remember that you should repay the money on or by your next pay period. Where people find themselves in trouble is that when they only pay interest and fees this will continue to add to your payday loan debt.

Some states have laws that allow payday lenders to give you a few extensions but not all payday lenders will offer you this luxury. So, if you are struggling to pay the loan on your next payday, you can check your states laws and or speak to the lender and possibly extend payment dates. Keep in mind though, that any extension will cause a significant amount penalties and this option is only available to storefront lenders, not internet lenders.

Make sure you realize that if you keep putting off the date your loan is due, the penalty will steadily increase and the amount of interest will continue to accumulate. If this happens, it can be increasingly tough for you continue paying on this debt. This is when payday loan debt consolidation help becomes a smart choice.

Payday Loan Debt Consolidation

If you are in a situation that you are getting payday loans to pay off payday loans and most of your check is going towards interest and fees then payday loan debt consolidation should definitely be something you should look into. Also realize you should take action as soon as you realize you might be having trouble getting these payday loans paid or you are just paying so much interest you find yourself not able to pay other bills.  The more you wait, the bigger be your payday loan debt becomes, and the longer it will take for the debt consolidation loan to get you out of the payday loan debts.

In conclusion its best to shop the rates on payday loans in your state and them make sure you can really pay it back on your next payday. If you find yourself paying so much interest and fees that most of your paycheck goes towards this amount it is vital you look to a legitimate payday loan debt consolidation company because you will pay a much lower monthly payment that what you’re paying now. Make sure you get the facts before you do anything.

Obama’s Watchdog Agency Now Reviewing Payday Lenders

Written by David Schmidt. Posted in Payday Loan Debt

“It seems payday lenders have finally awoken our federal government along with 19 million Americans who have too much payday loan debt. Below is an article written by Jay Reeves with the Associated Press.”

The Obama administration’s new consumer protection agency held its first  public hearing Thursday about payday lending, an industry that brings in some $7  billion a year in fees nationwide.

The Consumer Financial Protection Bureau said testimony from the session in  Birmingham — where City Council members recently passed a six-month moratorium  on new payday lending businesses amid concern over their prevalence and high  interest fees — would help guide the development of future regulations.

Richard Cordray

Richard Cordray

Director Richard Cordray said the bureau recognizes the need for short-term  loans, but the lending needs to help consumers, not harm them.

“Before this month, the federal government did not examine payday lenders,”  Cordray said. “Some state regulators have been examining payday lenders for  compliance with their state laws. We hope to use our combined resources as  effectively as possible.”

About 19 million American households now have payday loans, officials said.  With interest rates often in the teens and easy application procedures, lenders  said they generate business through radio and television advertising, plus  word-of-mouth and by locating offices in areas where other small-loan lenders  are located.

Many in the standing-room crowd of more than 400 were lending company  customers or employees who wore “I Choose Payday Advance” stickers provided by  the industry.

Tanzy Bonner told a panel she got a payday loan to cover the cost of her  6-year-old’s birthday party; LaDonna Banks said she got one because she couldn’t  work after donating a kidney to her brother.

“I borrowed the money, I paid the money back,” Banks said.

Steven Hoyt, a Birmingham City Council member who supports the moratorium,  urged the agency not to be swayed by such stories because the loans come with  exorbitant interest fees.

“It’s fleecing by any other name,” Hoyt said.

The Consumer Financial Protection Bureau has been in the spotlight because of  Republican opposition to its formation and President Barack Obama’s  use of a recess appointment earlier this month to tap Cordray, a former Ohio  attorney general, as its director.

With GOP legislators blocking the nomination because they said the agency  lacks sufficient congressional oversight, Obama installed Cordray — a move that  Republicans said was an unprecedented power grab. Democrats disagreed, saying  Republican presidents routinely filled vacancies by the same process. Obama  nominated Cordray after congressional Republicans opposed consumer advocate and  Harvard University  professor Elizabeth Warren becoming director.

Republicans kept up the criticism over the bureau’s formation as Thursday’s  hearing began. The chairman of the Alabama GOP, Bill Armistead, said Cordray’s  decisions “could have devastating impacts on an already fragile economy.”

“The last thing we need is another big government agency putting more  regulations on our businesses,” Armistead said in a statement.

Often criticized by advocates for the poor, payday loans are short-term,  high-interest loans that work like cash advances. Storefront payday loan  operations are prevalent in middle- to lower-income areas around Alabama,  sometimes taking over closed convenience stores or fast-food restaurants.

Loan amounts in Alabama are capped at $500 by state law, which limits the  maximum interest rate to 17.5 percent. An industry website said the annualized  interest rate for a 14-day loan of $100 tops 456 percent.

In a typical transaction, a borrower writes a check for $117.50 and gets $100  from the payday lender, who holds the check for a short period before depositing  it. If the customer needs the check held another two weeks, he pays another  $17.50 fee.

Officials said more than 20 percent of Alabama households have taken out  loans from payday storefronts or similar businesses at more than 1,000 locations  statewide. Opponents said the businesses prey on people who lack access to  traditional loans when they get in a pinch for cash.

“People get churned through the system six, eight, 10 times a year,” said  Stephen Stetson, a policy analyst at Alabama Arise, a Montgomery-based  anti-poverty organization. “If we have laws against gouging for gas and water,  we ought to have laws against gouging for loans.”

The head of Ohio-based Community Choice Financial Inc., which operates in  Alabama and more than a dozen other states, said the industry serves some 60  million people nationally and already is regulated by states, licensing  requirements and federal disclosure laws. CEO Ted Saunders said he was offended  by suggestions that payday lenders take advantage of poorly informed people.

“Listening to what you heard here today, you’d think my thousands of  employees go to work every day to hurt their neighbors,” he said. Rather than  enacting sweeping federal rules, he said, states should concentrate on getting  rid of “bad actors” in the business.

A Democratic state lawmaker in Alabama also expressed concern about the  potential for new regulations, defending state oversight of the industry and  arguing that low-income people need access to quick, easy-to-obtain loans. Many  people can’t walk into a bank and get a loan or withdraw money from an automatic  teller, said Rep. Oliver Robinson of Birmingham.

“The people who live in my district don’t have alternatives,” Robinson  said

Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/05/BUBG1ML04N.DTL

“Its really going to be interesting to see what the Payday Lender lobby will do in regards to this new oversight along with how involved our Government is going to be in setting policy on these payday lenders.”

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