Payday loans are a very convenient solution to an emergency financial problem; however, in some situations, it can turn pretty hard to repay. This is fraught with the necessity of debt settlement.
What is Debt Settlement?
The process of dealing with a person’s debts is known as debt settlement or consolidation.
This is not an instant solution; however, for many people, it is the only possible one.
Here are the steps to take:
- First of all, a person should calculate the total amount of your debt.
- It is better to apply for the debt consolidation company as the specialists there can work out the best possible plan out of debts as well as analyze the existing situation and draw conclusions in order not to get into the same trouble again.
- The next thing to consider is the opportunity to reduce the rates. In many cases, it is possible to negotiate this issue with a lender and get a bearable compromise.
- In all the cases a person will get a new repayment plan that will be easier to handle. With new terms and rates, payday debt is no longer a disaster but rather something that can be fixed with time.
Payday loan debt can be settled by several ways:
1. Debt Consolidation Program
As the name suggests, it is equivalent to a program that is applied to in case of a regular debt; however, it has got certain peculiarities. It is meant to help a borrower to repay the debt by making the terms more lenient and reducing the rates.
The idea of a payday consolidation program is that a borrower pays for the company that from now on becomes his or her mediator in the interaction with the lenders. They negotiate the repayment terms and the possibilities of the lowering of rates. A borrower does not need to make repayments to multiple lenders; instead, he or she pays a single monthly installment to a company that furthers the money on. The best part is that a borrower does not have to stress out about dealing with different lenders and only has to be punctual in repaying once a month.
2. Debt Consolidation Loan
It has got its advantages as opposed to the first option and also drawbacks. Behind this very option, there is the idea of applying for a separate loan that will help a person to cover all his or her standing payday debts at once and a person will have to pay monthly installments to one lender. Generally, it is more convenient and beneficial as the rates are lower and the term is longer. All in the entire whole thing appears to be less expensive than continuing with multiple lenders.
Payday loan consolidation is a way out for many people who found themselves facing multiple payday loans.
The thing is that they actually help to alleviate the existing situation as opposed to the case when a person does not take any measures. When it comes to payday loan debt consolidation, in the majority of cases it is possible to negotiate with a lender and make the terms more favorable to a borrower. Some of the pros are that a person does not have to interact directly with lenders, the main part of late fees and other charges get waived off and all in all the repayment becomes more affordable in all the senses.
This is also a better option as opposed to bankruptcy as the latter presupposes that a person will have no problems with credits in the future. A bad credit score is something that can seem unimportant at the moment; however, in some period of time it can be the very reason behind failure to get a loan that you need very much.
3. Debt Management Plan
DMP is a program allowing to settle an interest-killing loan at a lower price and for a longer period. It is actually not a loan but a special procedure of condensing numerous payments towards a number of accounts into one payment a month to repay the debt. This monthly amount is allocated to the lenders in agreed portions and also covers the cost of account support.
It is one of the best ways to settle the payday loan through the court by liquidating assets. A full list of government-approved agencies for pre-bankruptcy counseling can be found here.