Payday Loans Debt Consolidation

Pay Day Debt Consolidation – Some Common Myths You Must Be Aware Of

There are several myths associated with the method of pay day debt consolidation, which you must be well aware of. In fact, that is the main reason why most people fail to make the right decision. And, the wrong decision leads them to another problem. Therefore, it is very important for you to know how to differentiate myths from facts. Following is a brief overview on it.

Debt Settlement And Debt Consolidation Are The Same Thing

The most common misconception is that the concepts of debt settlement and debt consolidation are the same. Both methods can help you manage and pay off your debts, but the methods are different. In case of pay day debt consolidation, you get a chance to merge all your payday debts into a single monthly payment. You still owe the debts; it is just that you get a chance to make the repayment in an affordable manner by making just a single payment every month. You do not have to deal with all your lenders separately. Either a debt consolidation company works on your behalf in this regard or you simply convert all your debts into another account (thus paying off all your existing lenders and ending up with just one new lender). On the other hand, in case of debt settlement, you get a chance to settle your debts by paying a much reduced amount of money than the actual outstanding debt. In this case, you may or may not get the opportunity to pay back in installments. Some settlement programs require you to pay off the reduced amount of money in one lump sum.

You Have To Hire An Attorney To Consolidate Payday Debts

Another misconception about pay day debt consolidation is that the method requires the borrower to hire a lawyer. There is nothing as such. You can consolidate your debts in one of the two ways. You can either do it on your own by borrowing a new big loan so that you can pay off all your existing debts or you can hire a professional debt consolidator or credit counselor who will manage your debts on your behalf at a fee in such a way that you will be required to make single consolidated monthly payments. In either case, there is no need to hire a lawyer. But yes, if you are not well aware of the payday loan laws applicable in your state, you may like to consult a lawyer specialized in this field of law.

You Always Need To Hire A Professional Company

As said above, pay day debt consolidation is a method that you can use on your own also. It means you do not necessarily have to hire a professional company. It is up to you. If you think you are not confident enough to manage things on your own, you can hire a debt consolidator.

Debt Consolidation Program And Debt Consolidation Loan Are The Same Thing

What is more, you also need to understand that debt consolidation loan and a debt consolidation program are not the same thing. When you sign up for a program, you still owe all your debts to all your payday lenders; it is just that things are managed by the consolidator in such a way that it feels like you have just one debt account (because you make a single consolidated monthly payment). On the other hand, when you sign up for a consolidation loan, you actually convert all your debts into a new account. All your existing lenders are paid off and you end up with just one new debt account to deal with.

Last, but not the least, it is also very important for you to keep in mind that payday lenders are not legally obligated to agree to any pay day debt consolidation program you sign up for. Therefore, you are advised to talk to your lenders first before you sign up for any such program. Sign up only if they agree to participate in.

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