Take Control of Your Finances by Settling Your Debt

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debt payoff, debt management, debt consolidation, Payday Loans, interest rate
The following is a guest post. Enjoy! 
Getting out of an overwhelming amount of payday loan debt can be difficult to do without assistance. Thousands of people have gotten stuck in the cycle of borrowing payday loans that go unpaid because of more urgent financial obligations.



How Payday Loan Debt Spirals Out of Control

One significant problem with payday loans is that they are targeted to people who have credit issues and are struggling to pay their bills. While these loans may seem like a good idea in the short term, people who borrow this way often overlook other financial obligations that will come due prior to their next payday.
Once a payday loan is overdue, additional fees or penalties may be added to the balance. These fees are typically added every month, so the balance of a relatively small payday loan could quickly grow.


Many people who find that their debts have grown out of control decide that they will ignore the debt due to an inability to pay and a feeling of embarrassment about the situation. Unfortunately, ignoring debts often results in accounts going into collections. Having accounts that are so overdue that have been handed over to collections negatively impacts personal credit score, so people who have had credit problems and are borrowing payday loans for this reason may not be able to repair their credit.


Debt Management Solutions

Anyone who finds that they are unable to fulfill their financial obligations related to payday loans should immediately contact their lender to discuss payment options. While this is the first step in eliminating overwhelming debt, there are other tasks that must be done to ensure that the problem is taken care of permanently.


Getting help with debt is a matter of contacting a debt management provider that can use their expertise to help individuals get their finances under control.


The role of a debt management company is to contact payday loan or other lenders to explain the situation of the borrower in order to keep penalties from piling up on original balances. Once the lender has been informed about the borrower’s inability to pay, a negotiated payment amount that is manageable for the borrower will be established. This gives borrowers the chance to pay off their debts.


A debt help professional is able to assist borrowers with making the small changes in their lifestyle that have a big impact on their long time financial security. Even after advisors have helped borrowers get out of debt, they can help their clients with tips on how to stay out of debt in the future.


Not every borrower needs a debt management plan to help them pay off their outstanding debts, but many borrowers find that the overwhelming total of outstanding balances and fees that they are facing necessitates this service. A debt solution company can help borrowers figure out if they need someone else to step in and negotiate payments down to a manageable monthly amount.

 

How about you all? Have you ever used or looked in to using a debt management/settlement company to help you with your debt payoff?

Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

  • As mentioned in the article above, a debt management plan is not necessarily the best answer for everyone. 
  • In fact, you can actually accomplish quite a bit yourself by simply calling your creditor and explaining your situation. I don’t have personal experience doing this with payday loans, but I have experienced first hand that it can work well for credit card debt.
  • One thing that a debt management plan can help with though is to provide extra incentive/motivation for you to change your behavior of spending, if that is a challenge you are facing. Our staff writer, Travis, explained this very well in his post about his personal experience with his debt management provider.
  • If you are considering a debt management plan, it is very important to carefully review your options to make sure you are not being taken advantage of/paying too much for something of no value.
    • The National Foundation for Credit Counseling is a great place to start to find an honest debt management company.

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/c/c3/Chess_board_opening_staunton.jpg

Comments

  1. MoneySmartGuides says:

    I'm not against a debt management service, but I think that you should do everything in your power first. This includes calling up your creditor and working out a reduced interest rate or payment plan. If it gets to the point where they won't help or it isn't enough, then reach out to a debt management service.
    My recent post Financial Lessons Learned From The Bachelor

    • Thanks for your comment MSG! I am in agreement with you as well. At least from what I've experienced helping my friends with their debt payoff, you can make significant inroads by calling yourself.

      Have you ever tried calling your debt companies and asking for reduced interest rates?
      My recent post What are Your Options for Tax-Advantaged Retirement Savings and Investments?

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