In the US, about 31 states allow high-interest payday loans, and Alabama is one of such states.
Many people are falling behind in making payments due to the incessantly high-interest rates along with hefty charges.
Eventually, they fall into a debt trap which is making their lives miserable.
Here we share some of the experiences of the folks who are facing problems regarding payday loans.
So, let’s have a look at the scenarios along with the best possible solutions. Hopefully, it will be helpful if you are facing similar problems with your payday loans!
Scenario 1:
My name is Nick and I stay in Mobile, Alabama. Due to this pandemic, I have lost my job. I have been receiving unemployment benefits. But it’s not enough as I have a huge credit card debt to pay off.
My creditor waived off the interest rate for the time being due to this pandemic. So, I thought that this is the best time to get rid of my credit card debt.
Last month, I took out 2 payday loans with $400 each from Easy Money and Emergi Cash respectively!
I paid off my credit card debt but I am trapped with my payday loans. Right now, I don’t have enough money and the enhanced unemployment benefit of $600 will also end after a few days. I don’t know what to do!
I fear that I won’t be able to repay these payday loans. I am really worried! Can I close my bank account to stop payday loans?
Solution:
Hi Nick! Usually, while talking out a payday loan, you usually have to submit a check so that they can encash it for repayment. In fact, if you have opted for online payday loans, you will have to grant permission to your lenders to electronically debit the amount from your checking account on your next paycheck date.
If you close your account and your lenders try to cash your check, you will have to shell out overdraft charges for every transaction. If your lenders try to debit the amount, you will end up accumulating a hefty amount of overdraft fees
Ultimately, your payday lenders can send your accounts into collections.
I would suggest you place a freeze on your account. By doing so, your account will accept deposits but withdrawals will be prohibited. Thereby, your lenders won’t be able to withdraw funds from your account.
In the meantime, try to settle your payday loans and get rid of them. Otherwise, if your loans are sent for collections, then it will be quite cumbersome to get them off!
Scenario 2:
I am Rickey and I am a resident of Dothan, Alabama. I have 3 payday loans worth $2,500. Right now, I am going through a financial crunch as my business is not going well. So, it’s becoming quite cumbersome to make bi-weekly payments for these payday loans.
Is it possible to settle payday loans for a lower amount?
Solution:
Hi Rickey!
First of all, please stop worrying! I know, we all are worried about the pandemic. Besides, these high-interest payday loans are an added burden!
Yes, it’s possible to settle payday loans for a reduced amount! But let me ask you one thing! Are your pdl lenders legal? Please check it once. If the lenders are illegal, just pay off the principal amount. You aren’t legally obligated to make interest payments!
However, if the lenders are legal, you can try settling your pdls for a lower amount!
Try to negotiate with your lenders to reduce the outstanding balance amount citing the current financial hardship due to the pandemic.
But let me tell you frankly, the negotiation process with payday lenders is not an easy task! So, it would be better if you can approach a genuine payday loan settlement company. Most likely, the company will have a team of financial coaches who will negotiate with the lenders on your behalf.
Usually, these financial coaches have hands-on experience in negotiating with different lenders! So hopefully, they will be able to handle the negotiation in a more professional way than you could have done!
Hence, you can expect an affordable payable amount as the settlement company will try to negotiate with your lenders to reduce the outstanding balance amount along with waiving off any late fees or additional interest too!
Check with this settlement calculator how much you can save by settling your payday loans!
Scenario 3:
I am Heather from Phoenix City, AL. A few days back, I took out 2 payday loans from Cash 2 Go and Approved Cas.
I want to know how payday loans affect my credit score? Will payday loans show up in my credit report?
Solution:
Well, payday loans don’t affect your credit score! Usually, payday lenders don’t run a credit check while lending money. So, they don’t report to the credit bureaus either!
If you can repay your payday loans on time, it won’t either improve or slash your credit score.
However, if you fail to repay your pdls, your credit score might be affected! Because lenders can sell off delinquent debts to a third-party collection agency.
In most cases, debt collectors furnish details to the credit reporting bureaus. So, that’s going to affect your credit score. And it will stay on your credit report for up to 7 years!
So, try to repay your payday loans within the next payday. Alternatively, you can request your lender for an extended payment plan. But please don’t take out another payday loan to pay off your existing pdls! Also, make sure your payday loans are legal
Scenario 4:
I am Andrew. I stay in Montgomery, Alabama. I am in a tight situation. I have got 3 payday loans and the total outstanding balance is a whopping $3,500.
I badly need a way out of this situation. I was trapped with a credit card debt 2 years ago and the balance transfer method helped me a lot! Can I opt for a balance transfer to repay my payday loans? Please help!
Solution:
Hey Andrew! Yes, you can opt for a balance transfer card to repay your payday loans.
But make sure that the new card has a much lower interest rate! And if you qualify for a balance transfer card with a 0% interest rate for an introductory period, then that’s great!
Try to pay off your pdls within that introductory period! By doing so, you can save a lot of money on interest payments!
Lastly, I think you need to gain control over your finances; because as you said that you got trapped into credit card debt a few years ago. Now, you are reeling under this payday loan debt mess!
I would suggest you consult a financial advisor who can help you plan your finances so that you don’t need urgent money!
Scenario 5:
My name is Roy and I am stuck with my payday loans. I have been making bi-weekly payments. But my company has announced a massive pay cut for its employees. I don’t know how I will make payments for my payday loans. I need to make mortgage payments too!
I just calculated that after making the mortgage payments and other necessary bill payments, I won’t have enough funds to make payments for my payday loans!
I think I am going to default on my payday loan payments! One of my colleagues said that payday lenders garnish wages on defaulting payments.
Is that true? Can payday lenders garnish my wages?
Solution:
Hi Roy!
Your payday lenders can’t garnish your wages without a court order. For that, they have to win a judgment against you. And then only wage garnishment will occur.
When you default on a payday loan, the lenders try hard to recover the amount. They will try to withdraw funds from your checking account (you will need to grant access to your lenders as part of your loan agreement).
This way, you can drain away funds from your checking account. If your account doesn’t have enough funds and your lenders try to withdraw funds, you have to shell out a hefty fee to the bank.
After that, lenders can sue you for nonpayment of your payday loans. Otherwise, they can sell off your account to a collection agency that can sue you for nonpayment!
Looking at your situation, I would suggest that you should opt for settling your payday loans. It will help you get rid of your payday loans with ease and may also help you to organize your finances by chalking out a budget!