If you're in debt with payday loans, you're certainly not alone. You may have needed to borrow money to help with an urgent financial need, such as repairing your auto, but were never really sure how you'd repay the money you owed. Others were expecting a payment at the end of the month, but their personal circumstances took a sudden turn for the worse. Debt interest, charges and NSF fees can mount up extremely quickly.
No matter how bad things may seen, you can get debt relief from payday loans. It's just that sometimes all of the calls from collection agencies cause you to panic and lose rationality. However, you shouldn't forget that a fast cash advance loan is a form of unsecured personal debt, and that means that payday loan lenders have limited powers to recover their money from you.
Interest rates are high, but it's not a form of priority debt.
New Payday Advance Laws
Fast loans have legal restrictions in most U.S. states and are unlawful in some parts of the country, such as Georgia. Take some time to learn the payday advance laws so that you're in a position to ascertain whether the debt can be legally enforced against you. Restrictions regularly control how much you can borrow, the maximum rate of interest, the number of rollovers and how many advances can be active at the same time.
Sources of Debt Relief from Payday Loans
Debt Management Plan - If you're in debt with payday loans, you're likely to have other credit obligations that you cannot manage as well. A debt management company will carry out a negotiation process with all of your unsecured creditors and may be able to reach an affordable repayment plan with them. You'll make a single repayment to an intermediary each month until the balance has been cleared. Although none of your debt will be eliminated under the plan, you're able to repay your debts gradually and affordably over a period of time.
Chapter 7 Bankruptcy - Filing for bankruptcy under the 2005 code involves passing a means test, but most people who have serious debt problems are able to eliminate their unsecured debt and be discharged in just 4 months. However, the new bankruptcy law does state that you mustn't have borrowed money "in anticipation of going bankrupt". You may not be able to discharge payday advance loans that exceed $750 (per line of credit) that have been taken out within 70 days of filing. There are also rules with respect to rollovers, but the courts are unlikely to provide protection to usury lenders, especially if they've acted unlawfully.
Debt Settlement Program - If you're looking for an alternative to bankruptcy, debt settlement is the most effective way to get rid of payday loan debt and other unsecured liabilities. Debt settlement companies claim to be able to clear up to 50% of your credit obligations, leaving you to repay the remainder over a period of up to 3 years. Please be advised that, unless you are insolvent, any debt that you eliminate is treated as taxable indebtedness income by the IRS. The last thing that you want is to face a large tax bill just when you think you have a life that's free from debt.
Help when In Debt with Payday Loans
If you haven't already sought debt advice, you should seek help with payday loan debt from a not-for-profit credit counseling service, such as the National Foundation for Credit Counseling (NFCC).You'll be able to get some low-cost assistance from a trained and certified credit counselor. This includes advice on managing your money, information on payday debt solutions and a financial action plan for the future. No matter how bad things, you won't be alone.
