Posts Tagged ‘payday debt management counseling’

How Does Payday Loan Debt Management Counseling Work?

Considering the very fact payday debts grow very fast because of the extremely high rate of interest and heft penalty charges that lenders charge on it, it is often becomes very difficult for a borrower to plan on how to manage this rapidly growing debt problem. If you are also struggling with a situation like this, payday loan debt management counseling may prove to be a good solution for you. However, whether you should sign up for such counseling programs or not will depend very much on the specific factors involved in your specific case. Following is a brief rundown on how it works and how to decide whether it makes the right solution for you.

The Counselor Reviews Your Finances

When you sign up for this type of program, a counselor is appointed to look after your case and to guide you on how to take control of your situation. The first thing that a counselor does is a thorough review of your finances and debts, such as your regular monthly income, the status of your emergency savings fund, your regular monthly expenses, whether you are following a budget plan or not, your payment history toward different types of debts you owe and an array of other such things. After doing a thorough review of all these factors, they will be able to suggest you a specific type of payday loan debt management counseling program.

Different Types Of Counseling Program

A payday debt counseling agency these days does not only provide suggestions and advice on how to manage your debts, but they also offer you some very practical solution on how to pay off your loans quickly and affordably. Considering this very fact, there can be different types of counseling programs, such as the one where the focus is mainly on budgeting, a program to consolidate your debts on your own, handling your payments and managing your debts on your behalf, and many other such things.

How To Choose The Best Plan?

When it comes to choosing the best payday loan debt management counseling program, you must spend some quality time in doing your own research and calculations. Considering the kind of situation you are already in, you obviously cannot afford to have more financial burden on you. Therefore, consider those solutions first that do not require you to save more and spend less. A reputable and truly expert counselor should be able to bring you a solution to pay off your debts just through negotiations and a strict budgeting plan. They will first negotiate with your creditors and convince them to waive off penalty charges and allow you to pay back in easy monthly installments as part of a new, much easier repayment plan, where you should not be charged additional interest.

Another good payday loan debt management counseling plan is the one that allows you to convert all your payday loan debts into a single conventional debt account. The counselor will help you to borrow a low rate conventional loan, such as a personal loan. The amount of this loan must be big enough to cover all your payday debts. This way, you will be in a position to pay off all your debts that you owe to different payday loan companies and eventually you will be left with just one conventional loan account, where the repayment terms are much easier and quite affordable.

However, if none of the above two solutions work in your case, you can consider the third option, which requires you to sign up for a consolidation loan offered by the payday loan debt management counseling agency. As part of this plan, you will be asked to make a single consolidated monthly payment to the counselor who will further disburse the payments to your respective creditors. The agency tries to negotiate with creditors in this plan as well; the only difference here is that they also take the responsibility to make the respective payments to your creditors. They manage your debts on your behalf.

The Best Counselor Must Also Be A Legal Expert

Now that almost every state has imposed certain sets of payday loan laws to regulate payday lending practices, it is very important for you to make sure that the counselor you are working with is an expert in those laws as well. When it comes to finding out a solution on how to manage and pay off payday debts, the first step is to find out whether the lenders in question are following the laws thoroughly. The payday loan debt management counseling agency you are signing up with must be able to provide you legal assistance as well. The counselor appointed by them must first review the terms and conditions explained in the loan contracts and find out whether the lenders are violating any laws. If yes, you will have two options – you can either file official complaints against those lenders with your state authority or you can use it as your opportunity to negotiate an easy repayment plan. It is very important for you to keep in mind that the majority of states have prohibited the provisions of automatic rollovers and renewals but most lenders are still practicing the same. If this is the case with you, the chances are that you have already paid to your creditors a lot more than what you were legally obligated to pay. You even have the right to file criminal lawsuits against those lenders to commit such forgery.

There Are Even Laws To Regulate Counseling Agencies

Another thing that is very important for you to keep in mind is that there are even several federal as well as state laws to regulate payday loan debt management counseling agencies. For example, it is legally mandatory for all thee agencies to explain their services in a written agreement. The written agreement must provide full disclosure of the types of services and the fees that will be charged. The laws prohibit them from charging their fee in advance. They must first fulfill the promises they have made in the agreement and then they can charge their commission. Therefore, if any counselor is asking you to pay their fee upfront, you must take it as a huge red flag.

Do Not Provide Private Financial Information To Counselors

The counselor is there to guide you on how to get out of your payday debt problems. They must not ask you to provide confidential personal and financial details about you, such as your social security number, bank account details (user id and passwords), your credit card details and other such things. Never provide such crucial pieces of information to them, as they are not needed to perform their task. Instead, they are very much likely to use this information to conduct identity theft, pushing you into a much deeper financial trouble. So, be wary of such counseling agencies. Overall, the more informed you are, the better decision you will be able to make.

In each case, you will be charged a certain amount of fee for the services offered by the counselor. A reputable counselor usually charges a commission, which is a certain percentage of the total amount of money that they help you save on your debts. Therefore, you are advised to look out for a payday loan debt management counseling agency that helps you save more on your debts and charges less for their service. You are strongly recommended to review the written counseling agreement thoroughly, especially about the charges for the service.

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