Have you been struggling with payday loan debt and want a solution? We share how you can escape the pay debt and reclaim your life right here.
It may seem like a good idea at the time to take out a payday loan, but things can quickly get out of hand. The endless escalating payments can catch you in a debt trap that is hard to get out of, but even if you feel trapped, you shouldn’t lose hope. There is a way to escape your payday debt, and it doesn’t involve you getting into more debt.
The crucial thing is to act quickly and deal with the debt before it gets out of hand. Your situation may seem hopeless, but there are alternative sources of short-term loans that can help you escape the payday debt trap. Here are some options to help you pay down your payday debt:
1.Extended Payment Plans (EPP)
It is a requirement in most states that payday lenders have to offer EPPs, which are procedures that allow you to repay your loan over an extended period (generally up to four payments every week). All payday lenders who are members of the CFSA trade association have pledged to offer extended payment plans to borrowers struggling with repayment.
2.Debt Consolidation Loans
The best option to escape payday debt is to apply for a personal debt consolidation loan. You can borrow money at low interest rates and use the funds to repay your payday loan entirely and other high interest debts you have accumulated, like credit card balances.
You will need to repay the personal loan, but this strategy allows you to arrange predictable monthly payments within your budget. You will need a credit check to apply for a personal loan, but they are given to borrowers with bad or poor credit.
3.Payday Alternative Loans (PALs)
Payday Alternative Loans or PALs are short-term loans of up to $1,000 without any credit check and are designed by credit unions to help borrows address their payday debt. They are offered at reasonable repayment terms and aren’t too expensive. They are designed as an alternative to payday loans, but you can use one to repay your payday debt as well.
The maximum interest rate on them is around 28%, and you must make monthly installments every six months to pay back the loan amount. However, to qualify for PALs, you must be a part of a credit union for up to 30 days, and you may be asked to pay $20 as an application fee.
Peer-to-peer lending platforms present an excellent opportunity for people to repay their payday debts. No credit check is required, but they require proof of income and other assets that may make loan approval challenging for people with bad credit scores. It is easy to apply for a loan, and if you are approved, the money will be transferred into your bank account within a couple of days.
5.Debt Management Plan
If all your options fail and you are struggling to pay off your payday debt, your last option would be a debt management plan (DMP). When you get a debt management plan, you will be working with a certified credit counselor, who will come up with a debt repayment schedule and a budget, and may also negotiate with creditors and payday lenders to accept less money than the amount owed by you.
However, if you participate in a debt management plan, you will be required to disclose all your credit card accounts, and it will be a part of your credit reports. As most lenders view participation in a debt management plan negatively, you may have trouble borrowing money for several years.