The only debt worse than credit cards is payday loans. While
credit card debt will double in about 4 years, debt created by
payday loans will often quadruple in just one year, making these
the deadliest of all debts. One tiny slip-up can mean lifelong
debt, so it is very important to fix the problem, and fix it
Only a handful of states limit how many times your
payday loans can rollover and keep accruing interest at insane
rates, and even fewer make it mandatory for lenders to accept
payment plans – making your options for absolving the debt few
and far between. However, there are ways to get relief from
payday loans even without the help of those special laws.
Working With the Lender
In some states payday lenders must accept payments. If your
account has reached the maximum number of rollovers legally
permitted and you state that you cannot pay the balance, eight
states require payday lenders to set up an installment plan. You
can look online to find out if you live in one of these states.
If not, your first line of offense from the payday lender will
be a collection agency. Maybe these agencies are just a
specially developed breed, but for some reason collection
agencies working with payday lenders can come up with some
pretty scary threats. Don't let their empty words frighten you
too much though – technically, all they can do is sue you for
the debt, and they have to serve you with legal documents
telling you they are, in fact, suing you.
Dealing With the Collection Agency
Video: Payday Lending is a Trap that Can
Happen to You!
If you're just tired of getting the phone calls, you can send
a cease and desist notice asking the agency to stop all
communication with you. The Fair Debt Collections Practices Act (FDCPA)
makes it legally impossible for collection agencies to get in
touch with you after you have asked them to stop in writing.
However, before you try to settle the debt with the collection
agency, you should make sure the agency is actually legally
empowered to collect your debt with a letter requesting
verification and proof of the debt. Once you know these are the
guys you have to pay, then it's time to move forward with
absolving the debt.
Options for Paying Down Your Debt
The best options for paying off those payday loans are debt
consolidation and debt settlement. You can either settle the
debt on your own or negotiate with the collection agency,
but you should only take this road alone if you know how
collection agencies work. You should be able to get your debt
reduced by at least half, if not more, especially if you go
through a debt settlement firm. If the amount is still too much
for you to handle (or you are still accruing a lot of interest
and it hasn't been handed over to a collection agency yet), a
debt consolidation loan will get that debt paid off with a much
lower interest rate.