I have recently received a question form Helen:
“I’m drowning in payday loans, overdue credit cards, medical bills and utilities, etc. The regional consumer credit counseling organization does not deal with payday loans, just credit card debt. The payday loans are the big issue. I’m living in Texas. Do you know where I should go to get help?”
We both understand that the “big issue” is not the payday loans. They’re merely the final sign of the long-standing struggle you’ve been enduring to get your payments in accordance with your earnings. Thus far, the expenses have been winning. To actually support yourself, I would recommend that you start with the basics and dust off the budget that the counseling organization provided you with. In the event they did not provide you with one, then call a different agency and request assistance with creating a spending budget. This is actually the most effective way I know to determine if it is possible to live on the cash you’re bringing in.
If you’re able to live on the cash you earn but can’t fulfill your credit obligations with a part-time second job or by reducing expenditures significantly, I would suggest that you talk to a lawyer. Your lawyer will help you assess if bankruptcy can be your smartest choice or if you simply need help in getting the payday loan lenders to accept a realistic repayment schedule. The lawyer may also look into the regulations in your state governing payday loan providers and figure out if the loan company has done anything illegal, which may make your loan uncollectible. A great spot to look for a competent lawyer is the National Association of Consumer Bankruptcy Attorneys.
Luckily for the numerous clients like you who have fallen into the lending trap, law makers are taking notice. A lot of states have by now set up regulations that eliminate lots of payday lending violations, for example interest levels at the equivalent of 300 percent or more per year. 15 states as well as the District of Columbia have regulations in place that prevent payday loan companies from asking for more than a double-digit rate of interest for loans. The states involve Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Vermont and West Virginia.
Nobody deliberately gets mixed up in the payday loan cycle. The majority of people are simply frantically trying to deal with a certain unpredicted expenditure and don’t think about the long term implications of the payday advance, only that it eliminates the immediate predicament. Just about any choice is better than a payday loan. To help other people stay away from the vicious cycle, I recommend the following alternatives to a payday loan:
- Ask friends or member of the family for a loan.
- Borrow from a bank or some other small loan company. Make sure to realize all the fees and conditions before signing.
- Put off the expense till you have the cash. For instance, if you require funds to fix your car, find different transportation until you’ve got the money to repair the vehicle.
- Ask for extra time or get a part-time job to pay for the sudden expense.
Get in touch with your creditor and request additional time to pay or a repayment schedule. - Make use of your credit card. Although you may need to get a cash advance it’s going to be significantly less expensive than a payday loan.
For more information regarding payday loans, the Consumer Federation of America has some excellent customer info.
A final word in fairness to the credit counseling company that you went to for support: Reputable credit advice organizations will work with all of your lenders to offer help. It’s more likely that the payday loan company wasn’t prepared to work with the credit counseling organization to present you with any support. My guess is that the significant payment they were requiring made a debt management plan impossible. Reliable lenders tend to be ready to make concessions for somebody who looks for help via a credit counseling organization. That payday loan providers practically never make concessions to credit counseling customers speaks a lot about their business model and makes them a loan to avoid whatever it takes.