Stop paying payday loan legally and take more control of personal finances
Quick loans are like a blessing in disguise to many middle and top income earners in the United States. Circumstances do arise that require a quick fix. You need to pay the rent, and the next paycheck is weeks away. Your car breaks down one morning, and you have no means of getting to work. As you sit and ponder over your options, the bank is out of the question. So, you end up at the payday loan debt office or better still, apply for an online payday loan. For argument’s sake, say you need around $600 and reckon that the amount will meet your needs before you get a paycheck.
Cost breakdown and the math
Meanwhile, the lender breaks down the costs. For each $100, there is a $15 fee. You do the math quickly and agree that the deal is not a bad one. After all, the finance charge is only 15 percent. To conclude the matter, you sign the loan agreement and proceed to draw a postdated check for $690. When the loan falls due, the lender will either debit your bank account or cash your cheque. If you have everything properly planned, the bank will process a transaction, and you will have no continuing obligation with the payday loan company.
When everything goes South
However, things do not always work out as planned. Perhaps you do not have the $690, and even if your employer processes your salary, you remain broke. The chances are that you are going to request a rollover. The creditor agrees and proceeds to charge a fee of $90 with the understanding that on your next payday, they will collect the outstanding amount. Eventually, you cannot pay, and the loan keeps ballooning at every fortnight. Bear in mind that, on top of the interest and lender’s charge, the bank also penalizes you for issuing bounced checks.
When speaking to a lender is the only thing left
From the moment you realize that you cannot pay back, ignoring the matter only makes things worse. Also, struggling in silence might lead to depression. Inform your lender immediately and indulge them into accepting a repayment plan. The lender will while using the details you gave, try to recover the money from your checking account. When their attempt fails, they resort to other collection methods. Possibly, your lender has dealt with similar cases before. Also, the creditor will appreciate the effort you make towards repayment. Even if you do not have the full amount, they can accept what you have for now as you discuss a settlement plan.
Intimidation and threats, when you fail to comply
After exhausting every initial effort at recovering their money, lenders usually bring in third-party collectors. These guys can be very aggressive and do not allow you to have peace of mind. A collector will show up or call you repeatedly. Others will threaten you with court action or credit bureau notification. With these acts of intimidation, you can easily crack unless you stand your ground. To stand up against collectors and their tricks, you must be aware of your rights as a borrower. The law is apparent by stating what extent agencies can go and where they should not tread.
Stop that payday loan payment. Here’s how
Did you know that you can stop paying payday loan legally? Get ready to find out ways that will help you stop payment, stay out of debt and become financially secure.
- Put the debt collectors in their rightful place
Debt collectors, no matter how stubborn, are under obligation from the Fair Debt Collection Practices Act. According to the Act, debt collectors should not contact you at an inconvenient time or place. By default, their phone calls should be between 8 am and 9 pm. At the same time, a collector should not contact you at your place of work if they are aware that your employer prohibits such calls. Also, if you have contracted the services of an attorney, and the collector knows it, federal law prohibits them from calling you. Besides, the law is against the use of threats, obscene language, publication of your name and the making of anonymous calls.
- Borrow money, but less expensively
Instead of running to a payday loans lender each time you have an emergency, borrow from family or friends. To avoid trouble with people who are close to you, prepare an agreement in writing. Ensure that both parties sign it, preferably in the presence of another person. A credit union has an array of loans for their members. Unlike banks, they do not advertise these facilities, but you can get one upon inquiry.
- Go for personal loans
A personal loan is a friendly alternative since the lender gives you the option of paying back over an agreed period. Besides, you pay off the loan in fixed installments. You get the cash you needed and enjoy the benefit of spreading out your repayment. While at it, always remember that borrowing, irrespective of the kind, can be costly. Ensure that you only borrow an amount commensurate with your needs. Resist the urge to get a little more cash. Prepare a budget and let it be the base of your borrowing. You also need to understand that despite spreading out debt, the interest increases significantly. With the help of online loan calculators, you will find some cheap alternatives.
- Leave the payday loan cycle and stay away
From the earlier discussion, you now realize how payday loans entrap and suck you into a never-ending cycle. You need to make a radical decision to get out. No matter what, do not take a second loan and use the money to clear the previous one. Doing so is akin to following a dangling carrot without looking at the way ahead. Also, avoid roll-overs. Instead, request your lender for an arrangement that allows you to pay back in installments. If they decline, you can speak to a state regulator. Stop pay garnishment, i.e., where the lender recovers their money from your bank account automatically. You may have signed an agreement at the onset of the loan. Writing to them afterward and revoking your authorization stops future action.
- Consumer protection advice that you should not ignore
The Consumer Financial Protection Bureau further advises that you can issue stop payment orders, write letters to the bank and credit union. Besides, you have the right to prevent payday lenders from automatically deducting payments. You can tell the company outright through a telephone call or better still, write a revocation letter. Do the same to your credit union and the bank. For banks, they prefer written notification in 14 business days after the oral instructions.
The urge to borrow money on short notice is what fuels the popularity of payday lending. You cannot castigate the industry owing its importance in helping people meet urgent cash needs. However, circumstances do arise, and you end up not paying back in the two weeks of regulation time. Before you know it, you start rolling the loan over and taking out fresh loans to pay the previous one and so on. If you have reached such a point, keeping quiet will only make things worse. Do not feel ashamed to ask for assistance. Even as you do, consider other ways to stop paying the payday loan overflow. Also, purpose to escape the borrowing trap and stay out of it.
George worked in the credit bureau for five years before switching careers to become a speaker on credit score improvement. He is passionate about helping people get ahead with improving their bad credit and teaches people all the tricks he knows about debt consolidation.