Posts Tagged ‘Payday Loan Repayment Plan laws’

How To Work Out An Affordable Payday Loan Repayment Plan?

There are twelve states in the United States of America that have passed specific laws about mandatory payday loan repayment plan. As per those laws, if you are going through difficult financial crisis and are unable to pay off your debt on its set due date, you can request the lender to make the repayment terms easier and more affordable to you. However, it is very important for you to keep in mind that the exact provisions under these laws may significantly vary from one state to another.

States Where Affordable Repayment Plan Is Mandatory

Though every state has enacted its own set of payday loan laws, most of them have not mentioned anything about the amendment in repayment plan if the borrower gets trapped into a vicious cycle of debt. Luckily, some states have taken a serious step in this direction. The states that have made the repayment laws more favorable for the payday loan borrowers include Alabama, Alaska, California, Florida, Illinois, Indiana, Michigan, Nevada, New Mexico, Ohio, Oklahoma, Virginia and Washington.

How These Laws Can Help You?

Your awareness about your legal rights and the payday loan laws applicable in your state can play a crucial role in getting you out of the nasty debt trap caused by extremely high-cost payday loans. For example, if you are a resident of the state of Washington and you have already taken four consecutive payday cash advances from the same lender, you can request the lender to make the repayment plan more affordable. However, it is important to note here that the lender will be obligated to honor this request only if you have made a default on the last loan. It means if you have not paid off the first three loans in full and the fourth one is also due, you may not be able to take advantage of this legal provision. This provision is applicable when you have cleared all your previous debts but are now having difficulty in paying off the fourth one.

Hidden Catches

You have to be very careful while you are going through the payday loan laws of your state. There might be certain hidden catches. If you ignore them and make a

decision on the basis of half-cooked information, you can get into a deeper trouble. For example, the laws in some states about affordable payday loan repayment plan state that lenders cannot charge any additional fee (other than the maximum collection charges allowed) on a loan that a borrower could not pay back on its scheduled due date. Instead, the lender should allow the borrower to pay back the repayment amount within certain number of weeks. The hidden catch here is that these laws do not say anything about interest rates for this extended time period. It means even though lenders have been prohibited to charge any addition ‘fees’, they can still charge interest for the extended time period, which can be a whipping sum of money, as they usually charge a 3-digit APR.

Check The Rollover Laws To Get A Better Idea

In order to get a better idea about the mandatory provisions for payday loan repayment plan, you are advised to look into the rollover laws also. Most states have either banned the provision of automatic rollovers or have at least imposed a maximum number of times the loan can be rolled over after a borrower misses its due date. States where rollovers are completely banned include Virginia, Tennessee, South Dakota, Oklahoma, Ohio, New Mexico, New Hampshire, Nebraska, Montana, Mississippi, Minnesota, Michigan, Louisiana, Kentucky, Iowa, Indiana, Illinois, Hawaii, Florida, California and Arkansas.

Get Help From Laws To Prepare Your Strategies

Here, it is important to note that though the state of Louisiana prohibits rollovers, it allows lenders to accept up to 25% of the due amount and then treat the balance as a new loan for the borrower. This way, it is very much still like rollover of 75% of the loan amount. If you are having difficulty in paying off the full balance in one go, you are advised not to make any partial payment. Making partial payments will only dim your chances of acquiring an affordable payday loan repayment plan.

A good strategy here is to request the lender for a repayment plan and once a written agreement is signed by both you and your lender, you can then start making payments in easy installments over a certain number of weeks. This strategy is better than making a partial payment and then allowing the rollover of the remaining balance for another month.

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