How to Get Out of too Many Payday Loans

By Bill Herrfeldt

  • Overview

    It is so easy to get into a financial trap by having too many payday loans. Many states allow a person to not only roll over a payday loan, but to have more than one. Because of the high service fees or interest rates charged for payday loans, they grow much faster than do loans from a bank or credit union. Don't despair. There are things that can be done to alleviate the problem of having too many payday loans.
    • Step 1

      Talk to your lender about giving you more time to pay off the loans. Too often, when borrowers have difficulty in paying their creditors, they attempt to avoid contact with them. In fact, most lenders recognize problems and would like to help the borrower solve it. As an unsecured creditor, he stands little chance of recouping his losses if the borrower goes to bankruptcy court.
    • Step 2

      Work an extra job to pay off your payday loans. With your existing obligations, you may find this difficult to do, but no better way exists to payoff your payday loans. If this is a palatable idea, do it now rather than watch your payday loans grow any larger.

    • Step 3

      If possible, consolidate your payday loans into one. First, most payday loan companies charge about $20 per $100 borrowed for two weeks, far more than the interest you will pay on a consolidation loan. Second, if your consolidation loan has a maturity of 2 to 3 years, your payments will be less than they are currently.
    • Step 4

      Ask for help. Many people buried with debt engage the services of a credit counseling company to help them. If you owe money on your credit cards and are late in paying your rent or mortgage, those companies are trained to negotiate with your creditors. In some cases, they are able to reduce the interest and the principal of what you owe, as well as lengthening the term of the loans to make your monthly payments more affordable.
    • Step 5

      Declare bankruptcy as a last resort. Before doing so, you should exhaust all avenues available to you. Once you declare bankruptcy, your credit reports will contain that information for up to ten years. Not only will lenders be more apt to turn down your request for loans in the future, the loans you are able to get will be for much higher interest.
    • Skill: Challenging

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