If you've racked up payday loan debt and you're unable to meet the monthly payments, you may negotiate a settlement with the pdl lenders. Payday loan debt settlement enables you to get rid of your dues by allowing you to pay less than the balance you owe. With settlement, you can get out of the payday loan trap and avoid further harassment by pdl lenders and collection agencies.
How payday loan debt settlement works
You can co-ordinate with pdl lenders or collection agencies and settle your bills on your own. Make sure you know how much you owe in total. Just check your credit report to find out which bills are unpaid and whether the accounts are well past the Statute Of Limitations (SOL) period. Know how to settle your debts yourself.
In case you don't feel comfortable negotiating with lenders/CAs, you may take advantage of settlement services. Such services enroll you in a settlement program which requires you to stop paying your pdl companies so that you can save a certain amount each month. When you've accumulated enough cash for several months, the negotiator at the settlement company communicates with the lenders or CAs (whoever holds your accounts) so that they agree to accept an amount less than what you owe. Find the details on how debt settlement works and know about the pros and cons before you enroll in it.
Benefits of payday loan settlements
When you settle your pdls, you get the 3 benefits, as given below.
Steps to take before going for payday loan debt settlement
You should take the following steps before getting enrolled into a payday loan debt settlement program:
Calculate the payday loan amount
Go through your state pdl laws
Check the license of your lender
Put a hard debit check on your account
Once you close your checking account, your lender may file a lawsuit against you for violating the terms and conditions of the contract. This may in turn cost you a lot of money. You'll have to spend a hefty amount for paying the attorney fees and other court-related fees.
How to select a trustworthy payday loan settlement company
You can use the following tips to select a trustworthy payday loan debt settlement company:
Check the fee structureThe first tip will be to check the fee structure of the company. Under the new settlement laws, the companies are required to charge fees in proportion to the settled debt amount. So, if you find that the settlement company is not following this rule, then it will be wise to not do business with them.
Check the certificationsCheck whether the debt negotiators of the settlement company are certified by IAPDA. The debt negotiators can get IAPDA certifications only when they have sufficient knowledge on the settlement laws.
Watch out for the affiliationsAn important tip to select a good settlement firm will be to check whether they are affiliated with organizations like TASC, BBB, etc. You should also find out whether the company is a member of United States Chamber of Commerce.
Check the performance of the companyMake sure you work with a settlement company that has good success rate. Visit the official website of the company to gather information about the company. Go through the "testimonials" section (if they have any) and know whether the clients are happy with their services.
Find out if they offer service guaranteeFind out whether the settlement company offers any service guarantee to their clients. If yes, then check the type of assistance they will provide you if the settlement does not work out to relieve your debt burden. Check whether the company will refund your fee if they fail to settle your payday loan debts.
Consult your familyYou can always go to your family members and ask their opinion about the settlement company you're considering to work with. You can also ask them to recommend you a good settlement company in your state.
Apart from the above mentioned points, you should check whether the company follows the new settlement laws enacted by Federal Trade Commission. For instance, under the new laws, the settlement company can't charge fee prior to settling at least one account of the consumer. They can't also make false claims about their services. You should work with the settlement company that follows all the rules and regulations.
3 Signs to help you detect payday loan debt settlement scam
The following signs can help you detect a payday loan debt settlement scam if the company:
1 Refuse to provide you with a payment structure
2 Refuse to provide you with a contract
3 Guarantees to delete negative details from your credit report
In spite of the fact that settlement helps consumers reduce their debt burden, there aren't many companies offering payday loan settlements. This is because the interest rates on pdls are so high and the fees add up so quickly that it gets difficult to negotiate and reduce the balance to an amount that the consumer can afford to pay. So, most debt relief companies offer payday loan consolidation programs instead of settlement. Payday loan consolidation doesn't help to reduce the principal debt balance but it lets you obtain low rates of interest on your pdls. Moreover, the consolidator negotiates with your pdl lenders to cut down or eliminate late payment fees incurred on your accounts. The best thing about pdl consolidation is that you can clear your bills with a single monthly payment instead of making several payments each month.