Posts Tagged ‘payday loan debt settlement’

6 Ways On How Payday Loan Debt Settlement Can Help You Get Out Of Your Financial Plight

The process of payday loan debt settlement is very much similar to any other debt settlement program. Short-term cash advances are advertised as quick and easy way to borrow money as and when you need. Even people with bad credit can qualify for it. Though these lending programs are supposed to provide you instant solution for a temporary financial emergency, the sky-high interest rates that these loans charge often push debtors into a viscous cycle of debt. In fact, it is not just the high APR (can be as high as 600% p.a. or even more); there are other culprits also, such as unreasonably high penalty charges, hefty amount of check bouncing fees (can be charged multiple times), and automatic renewal of loan. It means if you fail to make the repayment on the set due date, a $300 of small loan can become a $1000 (or more) of outstanding debt within just a couple of months. When the outstanding balance grows to a high amount, it becomes impossible for the borrower (especially the one who lives paycheck to paycheck) to pay off the debt in full. You either need an installment plan or a settlement plan. Installment plan, which usually becomes a possibility when you sign up for a debt consolidation program, requires you to make small monthly payments for several months until the debt is paid in full. The settlement plan on the other hand requires you to make just one lump sum payment toward the debt – you pay less than the total outstanding due in full settlement of the debt as part of a negotiated deal with the lender. Following are the six ways on how these programs can benefit you.

It Helps You Get Rid Of Sky-High Interest Rates

If you manage to find out an effective payday loan debt settlement program and go for it, it will put a full stop on the growth of your outstanding balance by eliminating the provision of sky-high annual percentage rates. As part of the negotiation, lenders agree to charge you a low APR.

You Get Rid Of Entire Debt At Once

You can get rid of your financial liability in connection with payday loans at once. You can pay off the entire debt by making a one-time single payment. There are no monthly installments; you just have to make a one-time payment.

Over-Limit Charges, Check Bouncing Fee And Other Penalty Charges Are Waived Off

As part of a settlement program, you or someone on your behalf (the professional appointed by a debt settlement company) have to negotiate with your creditor to make the terms more favorable so that you can pay off the debt easily. These negotiations often result in elimination of penalty charges, such as late fees, check-bouncing fees and others. When these hefty charges are waived off, the total outstanding balance comes down to a very low amount.

You Pay Less Than The Total Outstanding Due

The biggest benefit of payday loan debt settlement is that it allows you to pay off your debt “in full” by actually paying less than the total amount you owe to your lender (lenders). It can be anywhere between 40% and 60%. It can be less or more depending upon how effectively negotiations are done.

The Program Provides You A Great Alternative To Bankruptcy

People who get trapped in the viscous cycle of debt caused by risky payday loans are often those individuals who earn a hand-to-mouth monthly salary. When the debts take a shape of the monster, it becomes almost impossible for them to pay it off in full and get their finances back on track. In such cases, many consumers take a drastic step and file for bankruptcy as the last option. Though bankruptcy may help you get rid of most of your debt problems, it comes with some severe consequences, which will adversely affect your finances for the next several years. It will seriously damage your credit score and your future financial life will become very difficult. Payday loan debt settlement can be a great alternative to bankruptcy minus all such consequences that you may have to face when a court declares you as bankrupt.

It Helps You Get Things Back On Track

When you get drowned deeper and deeper into the payday loan mire, you lose your peace of mind. The growing financial stress starts affecting your personal life also. After all, it is not at all easy to deal with all those harassing calls from creditors and debt collectors that are very much likely to happen when you do not make the repayment of payday loans in time. Though you do have certain legal rights to protect yourself from such harassments, it is practically not very easy to use those rights because of the legal hassles. Payday debt collectors, in particular, are often very aggressive in their behavior when it comes to collecting debts from borrowers. A settlement program can put a full stop on all such practices. You pay off the debts and thus your peace of mind is restored. There are no more collection calls. Once you get out of those nasty debt problems, you can focus all your energies on getting your finances back on track.

Overall, payday loan debt settlement is a nice concept that can make life very easy for you by pulling you out of the deepening payday loan mire. It is just that you must be very careful with your selection of the right program and right company. You also have an option to negotiate such a deal as a do-it-yourself project, but your success however will depend on how good your negotiation skills are and how prepared you are when you approach the creditor.


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