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Payday loan debt is a problem. It is a big problem. And as the payday loan industry rivals fast food restaurants in numbers, the problem is growing. Payday loans are loans borrowed against your paycheck. They can be taken against any postdated check you write. A borrower goes into a payday loan business and writes a postdated check for $350. ...
Payday loan relief is a common concern of those considering bankruptcy. And it should be. Payday loans are some of the most predatory loans out there. Payday loans provide quick cash. They are easy to get. But they come at a cost. A big cost. Typically payday loans charge nearly 500% interest. That is a lot even for the lending industry. As this Chicago Tribune story points out, payday lenders are taking some heat.
The way payday loans work is you post-date a check and exchange that for a quick cash loan. Lenders such as Check ‘n Go, Check Into Cash and others offer easy money for those in need. Repaying these loans is not as easy. If the post-dated check is not honored, the extreme interest rates kick in. And this is on top of the loan processing costs and fees. So if your $350 check to the payday lender offered in exchange for a $300 loan cannot be cashed when promised, watch out. No wonder so many are in need of payday loan relief.
Part of the problem, too, is the aggressive nature of the lenders. Many borrowers look to payday loan options because their credit is bad. Payday lenders are their only options. And the payday loan industry knows this. That is why they charge what they do. They can. That is little solace to borrowers who fall behind on these loans. And it is when the need for payday loan relief really shows itself.
Payday lenders charge enormous intest and excessive fees. And if you don’t pay them you need another loan to pay off the last. It becomes a cycle. For those in it, a vicious cycle. If borrowers don’t pay, payday lenders can tap the borrowers’ bank accounts. To get these loans you must provide your bank account information. All of it. And with that, payday lenders can essentially take from your account what you owe. Not good, especially if you did not know it was coming. Another reason borrowers often need payday loan relief is the aggressive nature of payday lenders. If you don’t pay the loans back, don’t expect to be ignored.
Bankruptcy is an option for payday loan relief. And it is a good option. Payday loans are unsecured debts that are commonly discharged, or eliminated, in bankruptcy. If you owe for a payday loan, you may eliminate it by filing bankruptcy.
Payday loans in bankruptcy are a common connection. If you don’t make good on that $300 post-dated check you gave to the local payday loan place for $250 cash, you are in for it financially. Interest rates nearing 500% kick in when your check doesn’t clear. And the amounts you can wind up owing accumulate faster than you can say usury.
Once upon a time usury, or loaning money at unusually high interest rates, was illegal. But no more–at least when in comes to payday loans. The industry carved out an exception to usury, arguing the inflated interest rates were necessary in light of the credit risk. Maybe so, but the amount you can wind up owing from unpaid payday loans can be astronomical.
Google has banned payday loan advertisements altogether. Here’s a story reflecting Google’s rationale. This payday loan philosophy only fuels the flow of payday loans in bankruptcy. Often when payday loans are not repaid in time, other payday loans are taken out to repay the previous ones. Soon this can become a cycle. Eventually options to borrow new money to repay old money run out.
Fortunately, payday loans can be discharged in bankruptcy. This is why payday loans in bankruptcy are such a frequent pair. Particularly problematic for payday loan lenders are the collection practices they face when the debts are not repaid. Some of the most aggressive and improper debt collection strategies and schemes are perpetrated by these lenders. Collection horror stories by the plenty derive from payday loan debts. Threats to arrest, immediate wage garnishment and bank levies are some of the more common collection ruses by the payday loan industry. Granted there are legitimate payday lenders out there. But anyone loaning money at 475% interest can’t be all good.
Whatever the story or scenario that may have led to your payday loan debt, know that bankruptcy offers a fix. Find out your options by scheduling a free consultation by calling me at (916) 448-6923.
Payday loans are the devil! Interest rates for such loans usually exceed 450% and, no, this is not a typo. If the postdated check you wrote for $350 you gave in exchange for the $300 you received is not honored, watch out. It will cost you! Often this results in the need to get another payday loan to cover the last one. Robbing Peter to pay Paul is not the answer.
Bankruptcy can eliminate payday loans. They are normally unsecured debts that can be eliminated in a bankruptcy discharge.
Linked here is an article from the Wall Street Journal illustrating the inequity of payday loans.