Payday Loans Debt Consolidation

When And How To Use The Services Of Payday Loan Debt Settlement Firms?

There are many payday loan debt settlement firms available in the market that claim to offer services that will help you get out of the vicious cycle of payday debts and regain control of your finances. But, it is very important for you to know when and how to use their services. You will find the following information helpful in this regard.

Not All Borrowers Can Qualify For Debt Settlement Plans

Payday loan companies usually agree to allow the borrowers to pay off their debts as per a specific debt settlement plan only in very extreme situations, such as where the borrowers have lost their jobs are going through severe financial hardship because of some illness (that keeps them away from job). However, even if you are not going through such extreme situations, there are still some payday loan debt settlement firms out there that can help you qualify for an affordable plan to settle your debts. It is also important to note that lenders are not legally obligated to agree to just any settlement plan that is proposed to them. Therefore, you are advised to sign up for such a plan only after making sure that your lenders have given their written consent to the agreement.

How Does It Work?

When you sign up for a payday debt settlement agreement, you get a chance to pay back anywhere around 30% to 70% of the total outstanding debt. You pay back a significantly reduced amount of money but it takes care of the entire debt. Payday loan debt settlement firms usually appoint a credit counselor to look after your specific case. These counselors also take specific payday loan laws into consideration. Every state has enacted certain legal regulations for payday lending. If the lenders are found to be violating some of those laws, it can work in your favor, as then you get an excellent opportunity to negotiate a settlement deal in your favor. For example, if it you are living in a state where payday lending is illegal and an Internet-based lenders has still issued you a cash advance, you are legally obligated to pay back just the principal amount without any interest or additional finance charges. You can either handle this situation on your own or let a debt settlement firm guide you on how to do it. However, if the lenders are not violating any of the laws, the settlement firms will still make sure you get a chance to settle your debts in an affordable manner. Depending upon your specific situation, you may be asked to pay off the reduced agreed amount of debt in one go or in several small installments over a certain period of time.

Obviously, payday loan debt settlement firms are not there to do any charity work. They are running a business and they also have to make profits. For this, they charge commission for their services. They usually charge around 30% of the total amount of money they help you save on your payday debts.


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