Payday Loan Debts: Expert Advice

23 Aug

The phenomenon of payday loans is a relatively recent one, and although they can help people who need quick access to short-term loans, they are often being used for long-term solutions. Exorbitant interest rates coupled with the ability to defer repayment are leading people into a cycle of debt that is difficult to get out of. In some cases, people are turning to payday loans to pay off existing debts, and that is usually a recipe for disaster. However, with some careful financial planning and a little help from a debt help specialist, people can free themselves from the constraints of payday loan debt for good.

The Facts about Payday Loans

The simple truth is that most people take out payday loans without knowing exactly what they are getting themselves into. Slick TV adverts and marketing campaigns can be very tempting, but they fail to communicate many of the facts surrounding this type of short-term loan. The number of payday loans issued in 2012 almost doubled from the figure in 2011, and the average amount owed on this type of loan rose by almost £400 on average. A loan of this nature is intended for one-off expenses that can take people by surprise. Unfortunately, they are being increasingly utilised as a source of income, and that is a wholly unsustainable financial strategy.

What Can a Debt Help Specialist Do?

The first step to breaking free from a perpetual cycle of debt is often to admit that there is a problem. A debt advisory service will be able to deal with creditors on behalf of debt-ridden consumers; a service that is invaluable for people who are not confident in dealing with creditors alone. The first step is usually a consultation with an experienced advisor – designed to create a complete picture of the client’s debt problems.

An expenses calculator is often used to ascertain a person’s disposable monthly income. The debtor enters all essential monthly outgoings as well as all sources of income. The maximum disposable income can then be used as a starting point for negotiations with creditors. A knowledgeable and experienced advisor will attempt to come to a mutually agreeable reduction in monthly repayments, and that is often sufficient to stop legal action before it begins. In many cases, a freeze in interest charges can be agreed upon from the outset.

If agreements cannot be reached with creditors, a debt advisor could recommend a number of alternative solutions, and they could include the initiation of an Individual Voluntary Agreement. This course of action will often reduce monthly repayments to a level that is affordable and sustainable over a fixed period, and any remaining debt is usually written off once the agreement has ended. Other possible strategies include a Debt Relief Order (DRO) or, as a last resort, the filing for bankruptcy. It may be possible to reduce monthly repayments whilst satisfying creditors with a payday loan debt consolidation advance; however, an affordable loan is hard to come by for those with a poor credit history.

There is no need for people to struggle with their payday loan debts alone. Speaking to an expert can result in the formulation of constructive and effective debt-reduction strategies, and it may also ease the burden and worry of facing such a stressful process alone.

Company Profile:

1st Point Debt Solutions offers debt management solutions to help you resolve your debt problems.  If you require help on your payday loan debt, please visit – http://www.1stpointdebtsolutions.co.uk

No comments yet

Leave a Reply