How Payday Loan Debt Assistance Agencies Work?
You must have heard a lot about different types of payday loan debt assistance programs. But, considering the wide array of options available out there, you may find it a daunting task to choose a suitable program that can help you get out of the payday debt hell. It is very important for you to note that the methods used by different programs may vary significantly. Besides that, just because a particular option has worked successfully for your friend, it does not necessarily mean that it will work for you also. Therefore, you have to be very careful with your selection. You must first choose a reputable company that is duly licensed to offer such debt relief programs and has a good success record in helping payday loan borrowers. In most cases, these types of debt relief programs usually include these four steps.
Setting Up A Monthly Budget
The main reason why you are looking out for a payday loan debt assistance plan is probably because you have lost control of your finances and are not even able to manage your debts. That is the reason when you enroll for such a program, a financial counselor is appointed for your case who works hand in hand with you to get things back on track. The first thing they do is to create a realistic budget based on your available income sources and essential living expenses. The budget is designed in such a way that allows ample scope for savings. If you show some good financial discipline and follow their suggestions thoroughly, you will soon be able to save enough to pay off all your debts. Always remember, just creating a good budget plan on paper will not do any good; you can get the desired results only if you implement the same thoroughly.
Determining An Affordable Monthly Payment
Based on your specific financial situation, the company providing you the payday loan debt assistance program will then work with you to determine how much money you can afford to pay every month towards debt repayment. They will also calculate how long it will take to pay off the entire loan if you continue making those affordable payments every month.
Negotiations With Your Creditors Or Collection Agencies
Based on the outcomes of the first two steps, the company will then negotiate with your creditors. If you are in a very poor financial position and cannot afford a reasonable amount of monthly payment, the chances are that the company will try to convince your creditors for a debt settlement plan, as per which you will be asked to pay a reduced amount of money in several easy installments in full and final settlement of your entire debt. As per these plans, you end up paying anywhere from 30% to 70% of the total
outstanding balance to get rid of your debt obligations. However, it is not very easy to qualify for these programs. These programs are usually offer to only those borrowers who have been badly affected because of a misfortune, such as job loss, severe illness, accident, and other such things. In other cases, the payday loan debt assistance agency will try to convince the lenders to reduce interest rates and waive off penalty charges and other fees. If you have multiple debt accounts, the agency may even try to consolidate your debts into one. It means when you sign up for a payday loan debt consolidation program, you will have to pay a single consolidated monthly payment to the agency and the agency will then further disburse the payments to your respective creditors. Some companies may ask you to borrow a new loan, a big loan, from them to pay off all your payday debt. This way, you can easily get out of the payday debt hell; your only obligations will be to pay off a single loan, which is equivalent in aggregate principal amount but with comparatively very low interest rate. However, no matter which type of program you choose to go for, make sure that you read the fine prints thoroughly in advance. You must have a clear understanding about what you are doing and what its consequences are going to be. Make sure that there are no hidden clauses or charges involved in the new agreement.
Protecting You From Debt Collection Harassment
Most payday loan debt assistance agencies will also do their best to protect you from debt collection harassments. It is no more a secret that payday lenders and payday debt collectors are often very aggressive in their collection activities. When a reputed agencies works as a mediator between you and your creditors, you stop receiving harassing collection calls. If you still receive such calls, the debt relief agency you have signed up with will provide you the necessary tools and support to prevent such collection abuse. Always remember, the Fair Debt Collection Practices Act is applicable to payday debt collectors also; they have no right to harass you even if you do not have money to pay off the debt. They cannot file criminal lawsuit against you just because you are unable to make the repayment of the debt, but you can definitely file a criminal lawsuit against them if they harass you physically or psychologically. You cannot be sent to jail for non-repayment of debt. So, you should not take such threats from them seriously.
Overall, a reputable payday loan debt assistance agency with good success record can definitely help you get rid of your payday debt problems within a matter of six to twelve months, depending upon the total outstanding debt in your name and how much you can afford to pay every month.
Category: Payday loans