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Payday Loan Debt Assistance

Consolidation Of Payday Loans

The interest rates on payday loans are horrendous. The fees, high repayment plans, and the crushing APR all add up to a disaster worse than most other types of personal loan debt. Payday loans aren't meant to be carried from week to week, or even month to month, but you're one of the unlucky ones. What can you do?

Just because you're drowning now, doesn't mean you have to be. Debt consolidation, credit counseling companies, and even traditional lenders are stepping up to the plate to help people just like you. Most likely, you'll be presented with one of three options:

Payday Loans Consolidation - This type of program is similar to a traditional loan consolidation. The only difference is that the lender underwrites a loan specifically to handle payday loans. The interest is high, but not as high as what you're paying now. Plus, you can pay off the loan over many months instead of having to devote entire paychecks to a single loan payment.

Loans To Consolidate Debt - These types of loans are traditional consolidation loans. They are a form of personal loan or home equity line of credit (HELOC). Once you've been approved, you're able to pay off your payday loans and then you must repay the bank. Typically, the HELOC is going to carry a lower interest rate than a personal loan, since the HELOC is secured by your house while a personal loan is still just an unsecured loan.

Payday Loan Settlement - Like regular settlement programs, payday loan settlement plans attempt to negotiate your payday loan debt to a manageable level. Your settlement company should warn you that settling a debt will ding your credit since you're not repaying the loan in full. Instead, you'll usually pay only a fraction of the debt. This makes it easier to retire the loans you do have, but it will make it really difficult to get any type of payday loan in the future.

Getting Help From Credit Counselors

Credit counselors may be your best bet when trying to manage payday loan debt. Counselors are trained to help you create a budget, negotiate with creditors, and facilitate debt consolidation. In a sense, counselors are personal finance experts when it comes to budgeting and basic money management.

While counselors are your bet resource, they don't work for free. Typically, you'll have to pay them upfront or they will charge you a fee that comes out of any consolidation loan or settlement plan. If a counselor wraps up the fee with the loan consolidation or settlement, it might be higher than if you paid upfront for services. For example, a counselor might charge you $100 upfront for services, or he might go ahead and help you get the consolidation loan you need and take a percentage of the loan as his fee. In the end, you may pay $150, $200, or more for his services depending on the nature of the work he's doing for you.

Getting Help From Your Bank

Your bank is the next best place to get help. Bank managers probably won't charge you a fee to help you, but you might find it difficult to get help from the bank in the first place. Banks are in the business of making loans, not doing settlement deals. What you'll probably get from your bank is a loan consolidation offer (if your credit is good enough). You might also get some basic budgeting help, but it's unlikely that you'll get an education similar to what a credit counselor will give you.

The Role of a Financial Adviser

Financial advisers are, surprisingly, the last place you should look for help. While it seems intuitive that a financial adviser could help you with your payday loan debts, most financial planners manage savings for people - they don't negotiate debts or help clients get loans. Investments are often the lifeblood of an adviser's practice so he gets paid only if he sells you something. Even if you work with a fee-only adviser, the adviser is still selling you a financial plan. That plan is often comprehensive, although some planners do sell modular plans that focus on a specific financial problem. The time to seek out a financial planner is when you're back on your feet and out of debt.

Don't Be Afraid To Shop Around

Just because a credit counselor should be your first choice for financial help doesn't mean that all counselors are equally good at what they do. Like any other profession, there are good counselors and bad ones, experienced and inexperienced ones, expensive and inexpensive ones. Even when you do find someone who seems like they can help you, it's important to connect with them on a personal level. You'll be talking with them about your personal finances, they'll be digging deep into your budget, negotiating debts for you, and possibly helping you get a loan.

You'll probably have to authorize them to look over your credit report, and you'll have to disclose your monthly bills to them. If you don't (or can't) feel comfortable with the person, it's just not going to work.