Posts Tagged ‘payday loan consolidatation’

Payday Loan Consolidatation – A Better Alternative To Bankruptcy

The number of people who are filing for bankruptcy because of too much payday debt is significantly increasing with every passing month. The majority of them are the ones who could have avoided bankruptcy by using better alternatives, such as payday loan consolidatation. But, because of their unawareness, people often fail to make the right financial decision. Even the initial decision, the actual cause of the problem, of borrowing multiple payday loans was also not a wise one. If you are also struggling with your debt problems resulting from multiple short-term cash advances and are considering using the bankruptcy protection, you are strongly advised to take some time and do a thorough analysis of your current debt and financial situation. Look at the various options that are available out there, which can help you manage your debts and bring your finances back on track. Following is a brief rundown on how a debt consolidation program can be a much better alternative to bankruptcy.

Effects On Credit Score

Though it is true that most of your payday debts are discharged fully or partially in bankruptcy, you must not forget at the same time that bankruptcy serious damages your credit worthiness. Payday loan consolidatation on the other hand does not affect your credit score that way. However, whether the effects of a debt consolidation program on your credit score is going to be negative or positive will depend on an array of factors. The actual impact on your credit report mainly depends on how things are reported by your lenders to the credit bureaus. For example, in cases, where a debt consolidation agency convinces the lenders to report the payments as “paid in full”, not as “paid in settlement”, it will actually help you rebuild your credit score – the impact will be very positive. However, even if the impact is negative, things will still be much better as compared to the consequences of bankruptcy. Bankruptcy stays on your credit report for 7-10 years while the negative entries of debt consolidation remain there for a comparatively very short period.

Wage Garnishment Or Liquidation Of Assets

No matter which type of payday loan consolidatation program you choose to go for, you will never face anything like wage garnishment or liquidation of your assets and properties. Such things happen in bankruptcy only. Bankruptcy will definitely help you get rid of the majority of your debts, but at the same time, it will have serious consequences. For example, the court may issue an order to liquidate some of your assets so that the payments could be made to your lenders. Likewise, the chances of wage garnishment are also very high, where the court sends a notice to your employer to seize a part of your monthly salary and to transfer the same to the bankruptcy trustee so that your debts could be settled using that money. You can easily avoid all this tough consequences by using a debt consolidation program as an alternative to bankruptcy.

Overall, a payday loan consolidatation program undoubtedly makes a better alternative to bankruptcy.

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What are the pros and cons of debt consolidation?