The alluring nature of payday loans has successfully managed to pull a number of people into its trap all across America. These high interest loans are basically a vehicle for lenders to earn lots of money through the act of lender. Sometimes the amount of outstanding debt becomes twice as much as the individual had borrowed. This translates to a very high interest rate. This is the reason why many state governments have put a cap on the highest interest rate that can be charged on a payday loan. If the amount of debt gets too much and you are unable to pay it back, you can opt for payday loan debt settlement.
What is payday loan debt settlement?
When your payday loan debt becomes so huge that you cannot pay back the entire amount in any way whatsoever and are almost on the verge of bankruptcy, you can use payday loan debt settlement to get out of your debt woes. In this process you have to approach a payday loan debt settlement company which will enroll you into a debt settlement program. As a part of this program, you are provided with a negotiator who will advise you on how to save more money from your pay check. However, their major work would be to negotiate with your payday loan creditors and convince them to reduce the amount of debt you owe so that you can pay back at least some amount of the debt. Although this is going to affect your credit score by reducing it, it will definitely not be as bad as bankruptcy. Bankruptcy reduces your credit score by 150 to 200 points and stays on your credit report for 7 to 10 years depending upon which Chapter you are filing.
How to stay out of payday loan debts?
The best way to avoid troubles with payday loans is to stay out of payday loan debts. It is advisable that you don’t take out payday loans often. In fact, you shouldn’t take out a payday loan unless you really require it. Once you have taken out a payday loan, make it a point to pay it back within the time period. For a payday loan, this time period is usually 15 days to 30 days which is basically the time till you get your next pay check.