Payday Loans Debt Consolidation

How To Get Pay Day Loan Debt Assistance From A Professional Debt Management Company?

There are many debt management companies and credit counseling agencies in the market that provide professional pay day loan debt assistance. Many of them work as non-profit organizations while others work as for-profit organizations. There is no straightforward answer on which types of organizations are better. You are advised to do your own research about the same. You will find the following information very helpful in this regard.

How Does It Work?

When you contact a professional debt management company for pay day loan debt assistance, they first do a thorough review of your finances, including your income, expenses, debts and other financial obligations. They will then get detailed information about your lenders and see if those lenders can be convinced to participate in a debt management settlement program. It is very important for you to keep in mind that there are no legal obligations on your payday loan lenders to accept such plans. Therefore, you must also study this aspect carefully before you sign up for a debt relief program. If your lenders agree to participate, a contract will be signed by all the three parties, including you, your lender and the debt assistance company. Depending upon your specific financial situation and depending upon the negotiation skills of the debt management company you have signed up with,

your lenders may agree to settle all your debts by accepting a reduced amount of money, which can range anywhere between 30% and 70% of the outstanding debt amount you owe to them. Here, it is very important for you to understand that lenders never write off any part of the actual principal amount. They will agree to write off only a part of the accumulated interest and other charges. In case of payday loans, such charges can be several times higher than the actual principal amount.

If a debt settlement cannot work in your situation, your debt management company will work as a mediator between you and your creditors. They will offer you a consolidation plan, as per which, you will be paying a certain sum of money as a single monthly payment to them and they will deal with the rest of the process on your behalf. You will not have to deal with your creditors directly and all collections calls will also stop with immediate effect, but only as long as you continue making regular payments as per the new more affordable repayment plan.

Review The Range Of Services They Are Offering

When it comes to getting reliable pay day loan debt assistance, the best debt management companies as per the Federal Trade Commission are the ones that offer a wide range of services, including monthly budget counseling, debt consolidation options, debt settlement options and other financial advisor services. A reputable company will never ask you to participate in a plan directly. Instead, they will first educate you about how to manage your finances on your own. Be wary of those companies who are more interested in encouraging you to participate in a debt management program directly without doing any review of your finances or without educating you about it.

Check Their Certifications

While you are looking for pay day loan debt assistance, you are also advised to check the certifications of the debt management companies. If it is a non-profit organization, check their certification and find out if they are running their business in compliance with the state and federal laws. Ask them to show their tax documents. You can check their tax status, such as whether they are filing their taxes as a non-profit organization or as a for-profit organization. Besides that, there are certain legal requirements that these types of companies must fulfill to run their businesses. For example, many states require debt management experts to be certified financial planners. You can find out the details about your state requirements for such companies by contacting your State Attorney General’s Office.

Besides that, you are also advised to prefer those companies who have additional certifications even if they are not mandatory as per the laws. For example, it is often safe to work with those debt assistance organizations that have membership to the American Association of Debt Management Organizations (AADMO) or other such national debt management bureaus. If the counselor you are going to work with is also a certified public accountant, it is a big plus.

Before you finally sign any written debt management contract for pay day loan debt assistance, you must read the fine prints thoroughly. Make sure that the new repayment plan is affordable to you. You should also enquire about how working on the suggested plan will affect your credit score and whether the company has any strategy to protect or improve your credit score while helping you to pay back payday loans.

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