There are some companies popping out of the woodwork lately offering to consolidate payday loan debt. This comes as no surprise seeing as how the decline of the economy has caused more and more people to seek out payday loans because they have no other way to borrow money. Some people take out loans from multiple payday lenders, and before they know it, they are in way over their heads struggling with debt. This is where payday debt consolidation comes in.
Is Consolidating Payday Debt a Good Idea?
It probably isn’t wise to use a debt company set up for the consolidation of unsecured payday loan debt. Many of these companies are operated by payday loan companies and do nothing more than take advantage of the poor and desperate with promises of fast debt solutions. A person who wants to consolidate any of her debt, regardless of where it originated, would be better off to talk to an actual bank or see if a non-profit credit counseling agency could either offer advice or set up some reasonable payment arrangements.
Breaking Free of the Payday Loan Cycle
Payday lenders will attempt to take funds directly out of a person’s bank account for repayment whether that person has it to spare or not, and this would likely be the case with companies offering debt consolidation for these loans as well. As a result, people end up owing numerous insufficient funds fees to their banks in addition to what they owe payday lenders. Sometimes it’s best to close bank accounts that payday lenders have access to and start from scratch so no more fees accumulate. Instead of going through a consolidation company in search of simple debt solutions, a person should make arrangements for repayment directly with the lenders he originally dealt with. It’s best to avoid giving out new bank account info to any payday lenders regardless of what threats are made. If collection threats get out of hand, a person should educate himself on the laws regarding interest rates and small loans in his area to get a better understanding of what his rights are and what a lending agency can legally do to get their money.
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