Consumers regularly turn to an unsecured quick cash advance when they have a history of adverse credit. An absence of credit scoring means that a same day payday loan provides a convenient way to borrow money quickly to meet an urgent financial need. Although a short term loan, many customers find it difficult to repay the money they owe at month end. Paying back a loan for $1,000 and any accrued interest (typically $250) can prove beyond many people. However, it is possible to get out of payday loan debt with a debt free solution or secured consolidation loan.
Filing for Chapter 7 Bankruptcy to Get Out of Payday Loan Debt
Filing bankruptcy under chapter 7 provides a way of eliminating unsecured debt with full court protection in just 4 months. The basic eligibility requirements are that the applicant’s income should be below the state median and that any non-exempt assets should to be handed over to the trustee. The cost of hiring a bankruptcy attorney means that it will only be suitable if other unsecured debts (unpaid credit card balances, unsecured loans, medical bills etc) can be included in the arrangement. Filing chapter 7 bankruptcy will show on a personal credit report for 10 years.
Payday Loan Debt Consolidation
Unsecured loans won’t be available because of past credit indiscretions so consolidating debt won’t be an option for tenants or homeowners with insufficient house equity. It may be possible to consolidate payday loan debt with a secured homeowner loan. The rate of interest will be lower and it will be possible to spread repayments over an extended term. It will also be possible to put lots of different unpaid debts under one roof. Despite its appeal, think carefully before turning unsecured into secured debt as it gives lender greater powers to recover their money in the event of default.
Getting Out of Payday Loan Debt with a Debt Settlement Program
A debt relief program, such as a debt settlement program, provides a way to eliminate up to 50% of all unsecured debt. Any remaining money owed will then be repaid over a 12 to 36 month period. Lenders may be willing to freeze further interest payments, but they aren’t under a legal obligation to do so. If they don’t, other options are preferred as interest will accrue too quickly to make this debt free solution financially viable. The management fee is normally about 15% of each monthly payment.
Pay Off Payday Loan Debt with a Debt Management Plan
Following a budgetary analysis and negotiations with creditors, a debt management plan can be used to improve affordability. Rather than repaying the amount specified in the credit agreement, it is possible to get out of payday loan debt at an affordable rate. Once again, this debt relief program will only be suitable if the lender is prepared to freeze further interest and charges. The lower monthly repayment schedule means that it will take longer to clear debt. The management fee is 15%.
How to Get Out of Payday Loan Debt
It is possible to utilise a debt relief program or perform payday loan debt consolidation to alleviate money worries, stress and anxiety. However, it is important to seek advice and guidance from a credit counseling service to make sure that the right option is chosen from the outset.