Posts Tagged ‘Paying Off Payday Loans debt’

How About Paying Off Payday Loans With A Consolidation Program?

Paying off payday loans can be a highly daunting task, especially when they are several months old. Since interest and penalty charges are very high, the eventual outstanding debt balance on these loans keeps on multiplying itself very fast. For example if you borrow a $500 of cash advance initially and do not pay it back in time, you may end up owing several thousand dollars after a couple of months. This is horrible situation that looks quite unjustified. After all, why should you pay back several thousand dollars while you had borrowed only $500 initially? But then, this is how payday lenders make money. And, that is the root cause of the debate whether payday lending should be banned or not. But, that’s another topic.

If payday lending is legal in your state and your lenders are operating their business in full compliance with the laws, you are legally obligated to pay back those thousands of dollars even though it looks unjustified. The only relief is that there are still some proven ways to lighten this huge debt burden quite affordably, such as through consolidation programs.

Debt Consolidation – A Better Solution Than Bankruptcy

When you are drowned neck-deep in debts, bankruptcy might look like an easy solution to avoid paying off payday loans. It is true that when a person gets bankruptcy protection, his or her unsecured debts get discharged, but at the same time, his or her assets also get liquidated. It means the bankruptcy trustee appointed by the court for your case will sell of all your assists (excluding the ones that come under property exemptions) and then will pay off your creditors (on the basis of a set priority) from the proceeds thus received. Not only that,

bankruptcy record also stays on your credit report for 7 to 10 years, which means it will become very difficult for you to rebuild your finances from scratch after getting bankrupt. As you can see, it is a horrible situation.

On the other hand, the great thing about paying off payday loans using consolidation programs is that it only shows you a way on how to manage your debts easily through a negotiated payment plan.

Payday Debt Reduction And Settlement

When you hire a debt consolidation company, they negotiate an affordable repayment plan with your creditors that can eventually help you get rid of your debt problems within as little as twelve to thirty months. However, debt consolidation is not all about turning a payday debt into an installment debt. A good, reputable company tries to convince your payday creditors to write off a large part of the outstanding debt balance so that it could be a justified amount of money that you may feel comfortable to repay. For example, if you have borrowed $500, and now after several months, you owe $3500 to your lender, a debt consolidation company can help you settle your debts by paying just half of that, which is $1750. Though it is still a big amount, but it is at least more affordable for you to repay.

Only One Monthly Payment Even If You Owe Debts To Multiple Creditors

Paying off payday loans using a consolidation program can be a great relief when you owe payday debts to multiple creditors. You no more have to make multiple monthly payments to them. Instead, you just pay a single, small, consolidated monthly payment to your consolidation company that further transfers the payments to your respective creditors.

No More Collection Calls

What is more, even all sorts of collection attempts are also stopped. You

no more have to face your creditors. Instead, your consolidation company becomes your legal representative and they do all the dealings with your creditors. This way, even the stress factors gets removed.

Overall, paying off payday loans using a consolidation program can be a reliable solution. You can hire a debt consolidation company to take care of your debt problems while you can have your entire focus on regaining control of your finances and improving your financial health. But, you must always remember, debt consolidation is not a magic solution. A strong sense of determination and financial discipline is very important for this solution to work.

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What are the pros and cons of debt consolidation?