Payday Loan Forgiveness: Methods That Work

Payday Loans Forgiveness

Financial problems will always crop up, and when they do, you need to find a quick solution. In your quest, you may stumble upon easy fixes where people promise you fast credit or cash. Usually, lenders entice you with a bombardment of advertisements. You will see ads online, on billboards, newspapers, radio, and TV. Advertising always has one motive – to appeal to your emotions. Once marketers grab your attention, chances of moving in and making a purchase are high. Seeing that you are desperate to get money quickly, seeing such an ad gives you a sense of hope. Both online lenders and the brick-and-mortar types trick you into thinking that they care about you.

Payday – one of the easiest loans you can secure

Take for instance Martin (not his real name). His car developed a problem, and he needed some money for repairs. Each morning while on his way to work, Martin would see a storefront sign enticing people to get money and that there were no credit checks carried out. The “credit check” appealed to him most. He did not want to have to go through the hassle of reviewing his credit report. On the day his car broke down, he visited the money lending store. By the time he left the store, Martin had $400 for repairs. However, there was a catch. He parted with a personal check worth $400 but after paying $50 as a finance charge.

The illusion that you will pay – a delusion

Martin had indicated the date on the check as a week later. Part of the terms and conditions state that a borrower issues the lender with a post-dated check. He chose a convenient date since he knew that by then, his employer would have processed his next paycheck. At the back of his mind, Martin noted that the lender charged him exorbitant fees plus interest. He was, nonetheless, confident that come the following week, he would pay back and retrieve his check. Eventually, Martin repaired his car and was back on the road driving to and from work as was customary. He even had some extra cash for a little shopping and a movie date with his fiancée.

When a rollover is inevitable, and you do it anyway

Come payday and everything turned upside down. Martin checked his bank account and observed that, while he could afford to pay the lender, he still had other things to take care of and settle. In other words, he did not have enough to pay back and meet his monthly living costs. Martin called the storefront and requested to have his loan roll over for two weeks. However, the lender required him to pay another $50 fee. Sadly, Martin did not pay back his loan as he had anticipated. Each time he planned to, something else came up. Luckily, the lender was ‘helpful’ and allowed Martin to continue rolling over his loan.

Pressure, a trigger for consolidation

With piling pressure to clear your dues, debt consolidating seems like the most brilliant path to pursue. Through this approach, merge all your loans and centralize their payment. Instead of having an array of payments all over, a single remittance window suffices. Professionals from the payday loan industry claim that borrowers use these loans one time after which they move on with their lives. On the contrary, credible research has shown that on average, one payday loan customer has about 11 transactions in a year. The statistic translates to roughly one loan per month.

Payday loan – what it is, and how it sucks you into a bottomless pit

To cut a long story short, Martin played the rollover game for five months. During this time, he paid finance charges worth $550. Surprisingly, he still owed the lender $400. So, what happened in this hypothetical case? Martin, who could be any American borrower, got into a trap. By now, you already know that we are discussing a typical payday loan. The facility also has other names: –

  • Deferred-deposit loan
  • Cash advance loan
  • Post-dated check loan

Payday loan approvals take only a few moments, probably a few hours. Besides, the lenders do not subject their loan applicants to credit checks. In typical fashion, you merely write a check for the loan plus a finance charge or fee.

The urgent need to walk out of the loan entrapment

From the above discussion, you realize that if you make a tiny mistake, you could end up being in debt for the rest of your life. What is the most reasonable thing to do? The answer is, get out of the payday loan cycle as fast as you can. Martin, used in our illustration earlier, found himself in a sequence where he was only paying rollover fees. He never got around to paying back the original $400. Besides, the interest on his payday loan could be at 1,000 percent. Imagine what this would translate if a bank were to provide you with such a benefit for keeping money in a simple savings account.

An allure towards the irresistible

Have you ever noticed the strategic location of payday lenders? You will see them in your neighborhood huddled between the grocery stores and your local restaurants. Another observation that may have escaped notice is that these lenders put up shop in regions where the occupants would not qualify for an ordinary loan. If you are sharp enough, you will realize that payday loan establishments take advantage of residents who are afraid of borrowing. Their credit scores are so weak such that no mainstream lender can give them money. At the same time, when the lender avoids conducting a credit check, there are no charges for that.

Bad checks, and the trouble they cause

Now, let us revisit the matter of the personal check you wrote and left in the lender’s custody. If you have insufficient funds in your checking account, the bank will charge you for issuing bounced checks. Lenders charge you for the trouble you caused them. In some states, the federal law treats it as a crime for a citizen to issue a check while knowing too well that they do not have funds in their bank. Consequently, lenders can raise lawsuits on such errant borrowers. While borrowing is not a crime, writing bad checks is criminal.

A look at the possible exit from indebtedness

In a nutshell, payday loans behave in a way that traps you into a cycle that sees you pay fees over and again. By the time you are seeking for payday loans forgiveness, you may find that you have paid up to 10 times of what you had borrowed at the onset. Is there a way out for someone who is way too deep in debt? Are there exit plans to borrowers overburdened by payday loan obligations? One of the most significant challenges most adult Americans are facing is how to make ends meet. Some have gone to extreme ends to place food on the table. However, no matter the circumstances, you should not give up on life because of a debt.

Solutions are in sight – try these

Unfortunately, the world measures one’s success by their net worth. As such, financial difficulties can easily cloud your judgment and push you to realms of anger, fear or even anxiety. You must have heard of horror stories where ordinary people lose control and end their lives. While you may want to apportion blame, the anguish is legitimate. Fortunately, payday loans misery has a solution, and you can find assistance. Here are some types of help: –

  • Credit counseling
  • Debt management
  • Debt negotiation

 

  1. Credit counseling – a sneak peek
    To understand how credit counselors work, think of a married couple who is struggling with marital issues. After a while, someone introduces them to a marriage expert for help. A credit counselor helps people grappling with debt problems. A trustworthy and reputable expert will first try and understand how you got into the present financial mess. Through a holistic approach, they comprehend not only the magnitude of your debt but also your financial management. A session lasts for an hour or so and involves having a chat as well as a series of probing questions. From the discussion, the counselor later studies the information you provide and uses their skill to offer solutions.

How to engage a financial counselor
Counseling agencies charge a fee for the services. Even so, they should freely avail information about their services. Before committing one, you need to find out: –

  • Whether they have the mandate to offer services in your region
  • If the counselors in their panel have the relevant accreditation
  • If the information you provide will remain confidential
  • Whether they can share details about their services before you tell them your story
  • Their fee structures
  • When you can pay them a visit to their offices
  • How long your first interview would take

Compare the answers given by different agencies but use the above queries as your standard. Some agencies offer their services online, by telephone or through a face-to-face session. Try as much as you can to find a counseling agency where you can speak to the counselors one-on-one. Also, verify that the credit counselor will help you deal with all your debts and not a select few.

2. Debt management plans
In a Debt Management Plan, your financial coach negotiates with your creditors, of course, with your involvement. The aftermath is a payment plan where you offset your debts based on a schedule. Credit counselors are of great importance when drafting DMPs. They can fetch you good deals consisting of reduced interest rates, and removal of finance charges. Once you have a plan in place, you now begin paying to the credit counseling agency who then channel the funds to your creditors. Besides, your credit counselor helps determine the lifespan of the repayment plan. Before signing up for a DMP, work on your spending habits to avoid a recurrence of debt problems.
At the same time, spend sufficient time with a counselor and make sure you have understood how to manage money. Before consenting to a debt management plan: –

  • Confirm that your lender has offered you concessions
  • Do not stop paying your creditors; proceed as before until you can ascertain that the DMP payments have started going through
  • Keep your monthly payment affordable
  • Check that the creditors receive your payments before the due dates
  • Reconcile your bank statements with those from lenders and ensure they match
  • If you fail to make a payment for whatever reason, notify your counselor

3. Debt negotiation – speaking up when you must
One common goal with all creditors is that they want their money back. Hardly would payback loan lenders take your property for failing to pay. Also, you can choose to have all debts wiped off through bankruptcy. In life, you cannot get anything without asking for it. Most borrowers fear their lenders and will, therefore, keep quiet and suffer in silence. No one will punish you for telling them that you are in financial difficulty. Therefore, summon the courage and alert your lender. During your negotiations, request that the lender waives the high interest on the loan. While at it, suggest measures you consider taking up to pay them. Some lenders will not buy your story outright, but with persistence, they finally concede.

Other ingenious ways to help you repay loans

By now you appreciate the value of planning your finances through a budget. The step is a noble one, and with the right discipline, you can recover from the yoke of debts. Budgets work in two ways: saving from reduced expenditure and finding other ways to increase your income. Here are three ways you can adapt to get out of debt: –

  • Take a side gig: Find some work that you can do on the side and use the proceeds to pay off the existing payday loan. While doing extra work may not fit into your daily schedule, you have little or no choice at this juncture.
  • Sell some stuff: If you carefully look around your house, you will find a lot of items that you no longer need. Examples include clothing, old furniture, computers, books and so on. Gather these items and sell them. You can advertise the sale online or take advantage of car boot sales that take place in your region.
  • Reduce your expenses: As you focus on finding ways to raise cash, you must also consider going slow on some daily expenses. For example, instead of going for lunch at the restaurant, consider making a meal at home and carrying the food to work. You could also stop paying for TV and movie subscriptions. Besides, if you use your car to and from work every day, consider leaving it at home and use a train or commuter bus.

Lifestyle changes, you have no choice

If you carefully, examine your lifestyle, your chronic borrowing of payday loans is not necessarily the problem. Analyze your life again, and you will find that there are other triggers beneath the habit. Perhaps you have over-maxed your credit cards, and you ended up getting listed by the credit reference bureau. As a result, no bank or conventional financial institution can lend you money. Also, perhaps you are a poor stickler for budgets. You keep writing them but cannot come around to implement any. Further, you do not have any savings that you can fall back to in times of hardship. You could also be having the compulsion to spend.

In all these instances, you find that you always live from one paycheck to the other. To survive, you go for payday loans as the easy option. Well, once you narrow down on the problem, the next step is to track your expenses. Knowing where your money goes every month can provide useful insights into your spending habits and cash management. As a starting point, buy a notebook (one that can easily fit inside your pocket). Carry it with you everywhere you go, and whenever you spend, record the cost in that book. Later in the evening, transfer the information to a spreadsheet. Be honest and note every little or large expenditure. At the end of the month, analyze the data.

Now that you know how you spend your money, consider making some radical changes. Use the information gathered above to create a budget. Make it your objective to squeeze some cash to offset your loans. You have been relying on loans as a safety net. Do you not think this is an opportune time to cut the problem from the source? If you fail to act in good time, lenders will be all over, and before you know, they are causing hell. Again, the harsh reality is that once you waste your hard-earned money, there is no way to recover. However, once you resolve the situation, you can always re-adjust your budget.

Some quick budgeting tips would suffice: –

  • Set your goals; keep them realistic
  • Separate income from expenses
  • Distinguish your needs from wants
  • Anticipate costs that sprout at random
  • Create a budget
  • Implement the plan

Debt consolidation, when several loans become one

Just as the term suggests, payday loan consolidation involves combining all your pending loans into one. Eventually, you only make one payment per month. With the help of a debt consolidation firm, you have someone who will contact the borrower on your behalf. They then discuss your financial position and derive an amount that you can part with each month. After that, the consolidation company opens an account with a bank. Using this approach, you can take between six and 18 months to clear your loan. If you cannot repay in a span of two or three months without disrupting your budget, then you are a candidate for consolidation. Also, if you cannot do without a payday loan in the next 90 days, you need to consider the consolidation approach.

Final word

From an ordinary perspective, payday loans are an ideal solution for emergencies. Regarding size, payday credit is small compared to other forms of borrowing. On average, what you borrow consists of several hundred dollars. However, you have to repay within two weeks (14 days). Another realization is that many who take this form of short-term credit often run into difficulties when paying back. By the time you are receiving your paycheck, you find that you cannot pay and still have money to take you through the month. However, even if you manage to clear the first loan, circumstances often force you to borrow money again.

Another common trend is where, upon running into end month difficulties, opt to roll over the loan to another two weeks. Thinking that you are only doing this for a few weeks, you end up with a colossal obligation that runs for a year. Ironically, it is the interest and finance charges that increase while the principal amount remains constant. Despite their costly nature, payday loans may not be the problem. You could be the one with some financial weaknesses that lead you to resort to this mode of credit. As you seek payday loans forgiveness options, also consider putting your house in order.

Seek professional assistance, people that can speak on your behalf and lenders will listen. Credit counseling is an excellent starting point. Find someone who is skilled in financial matters and can help you find solutions. Creditors can be harsh at times, but when you approach them with options, they will always listen. Besides, they want their money back, and often welcome any steps taken towards that end. You can re-negotiate your debt payments or make some lifestyle changes that either bring additional income or save you some. If you have never worked with budgets before, perhaps you should now start. Learn to live a disciplined financial life as you work hard towards clearing your debt obligations.