Debt Consolidation Programs for Payday Loan Debt

Jul 30, 2013 by

Payday loans were meant to help keep you out of financial difficulties, but they can have the opposite effect and create a much more difficult financial hole for you. If you obtained a payday loan that you couldn’t pay back on time, you may have taken out another one to pay back the first. If you continued on this cycle, you may have several payday loans that are impossible for you to pay back.

What Debt Consolidation Programs Are Not

You may have heard of debt consolidation programs for people in credit card debt, but you can enter into these programs with payday loan debts. First, you must understand what debt consolidators cannot do.

Debt consolidators are not lawyers, so they will not be able to give you legal advice. They also are not part of a collections agency, so they will not purchase your debt. When you hire a debt consolidator, you will not meet with her on a regular basis.

Debt consolidation programs with a non profit company like Credit Guard are not debt consolidation loans. Your debt consolidator will not suggest that you take out a home equity loan and will not assist you in this area if this is what you decide to do. If you determine that the only option for you is bankruptcy, your debt consolidator will not be able to help in this arena either, but you may be able to obtain a referral to a good bankruptcy attorney.

Debt consolidation programs are also known as debt management programs. Your consolidator will not settle your debt for a lower amount. Consolidators can reduce the balance by asking your creditors to waive late fees and penalties, but they will not ask your creditors to accept an amount of money that is lower than the amount that you owe. However, your consolidator will seek to lower your payments by asking your creditors to lower your interest rates.

What Is Possible on a Debt Consolidation Program?

Debt consolidation programs offer people the help of useful credit counselors who will seek to eliminate your debts and also offer you money management advice. In your first meeting with a debt consolidator, you will find out if the program is right for you. If so, the consolidator will make a new offer to each of your creditors for an amount that you can easily pay each month. They do this by asking for a lower interest rate on your debts.

The Benefits of Debt Consolidation Programs

Once you find that your monthly payments are lower and easier to pay every month, you will immediately begin to enjoy life again. You will save a lot of money on interest over the years, and it will take much less time for you to re-pay these debts in full. If you were receiving calls from collections agencies, these will stop. You may even begin to save money so that you will never need to take out a payday loan again.

If you take out a debt consolidation loan, you will not eliminate your debts quickly. A better solution is the debt consolidation program that will reduce your debts to zero in less time than you could have imagined.

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