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Solutions, Your Rights and Free Tips to Get Out of Payday Loan Debt
You can get out of payday loan debt, from slow baby-steps to even more radical solutions; other than filing bankruptcy, for those who are desperate to get fast relief.
Free Tips:
Tip 1: Stop piling up even more payday loan debts. Sometimes; when you know you can payoff a 2nd payday loan upon your next paycheck, should be the only times when you use a payday loan to repay a payday loan.
Tip 2: Add extra principal payments to paydown the debt quicker.
Tip 3: Call your payday loan lender to work out arrangements to repay in installments. Of course; most lenders are not going to want to cooperate, and will want to hold you to the original loan terms. However, a few states require lenders to provide extended payment plans (Alabama, Alaska, Florida, Illinois, Michigan, Nevada, Oklahoma and Washington). If your lender refuses to work with you, contact your state regulator to ask for help.
Tip 4: Similar to Tip 3, if you cannot get a lender to re-negotiate payments on your own, consider hiring a credit counseling agency who will do this for you. But don't confuse credit counseling (aka debt management) with debt settlement. In debt settlement (Tip 10), you negotiate lenders to erase part of the principal due in addition to interest/fees. With credit counseling; however, you are simply agreeing that you owe the principal, but you need some fees reduced and you need a longer term for repayment with additional interest/fees.
Tip 5: Stop lenders from taking money directly from your paycheck. Read your contract to see if you signed a voluntary wage assignment clause. If so, write a letter to the lender to revoke that agreement so the lender won't be able to garnish your pay from your employer without court approval. Mandatory wage assignments as used in some payday loan contracts are prohibited by the Federal Trade Commission's Credit Practices Rule. If this option is open to you and your desperate to stop a payday lender from drafting your checking account, consult your bank. Your bank can advise when it makes sense to close your account and to open a new one to get control of loan payments and stop escalating Non-Sufficient Funds (NSF) fees generated by repeated attempts to collect on the check held by the payday lender. Contact your banker quickly, before payday loans cause your account to be overdrawn. 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. Your bank or credit union can also help you stop payment to lenders that electronically access your bank account. If the loan is not paid, lenders in some states can take action under civil bad check laws. In most states, however, lenders cannot file a criminal case for passing a bad check.
Tip 6: If you feel you've been wronged or that your lender won't cooperate with you, file a complaint or ask for assistance from the agency that regulates lenders in your state. Even if payday lending is legal in your state, lenders may not be complying with all the rules. Regulators may be able to help you work out a payment arrangement with licensed lenders. And, if you live in a state that doesn't allow payday lending, the state regulator can take action against unlicensed lenders.
Tip 7: Get legal help. Look for the local legal aid program. If you are in the military, contact the military legal office on base. Find a consumer attorney in your area who handles Financial Services cases.
Tip 8: Report lenders who fail to disclose the cost of payday loans. Lenders are required to quote the cost of loans as both the dollar finance charge and the annual percentage rate. Report violations of the Truth in Lending Act to the Federal Trade Commission's Consumer Response Center. Toll-free 1-877-382-4357; TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, DC 20580; or by e-mail using the online complaint form at www.ftc.gov. The FTC does not resolve individual problems for consumers, but it can act against a company if it sees a pattern of possible law violations.
Tip 9: Get an 'unsecured debt consolidation loan', which you can get by taking advantage of equity you have, such as in a home or an auto. By borrowing against these assets, you can get a cash loan to payoff higher interest loans; or high fee rates in the case of payday loans.
Tip 10: If you're desperate for relief and no other options have worked for you and you are thinking you'll just stop repaying payday loan debt altogether, consider a debt settlement chargeoff. Let the lender know you intend to default if they won't settle on a lesser repayment amount. For example, if you have $10000 in unsecured payday loan debt (principal and fee charges), see if the lender(s) will accept a fraction, such as 50%. If you don't feel comfortable performing your own free debt settlement negotiations with creditors, not only can hiring a debt settlement company relieve you of this hassle, but may also be able to get a higher chargeoff amount for you, saving you even more money. But be aware, debt settlement chargeoffs can cause severe damage to your credit score.
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