Payday Loan Debt FAQ
What is a payday loan?
A payday loan, also called a paycheck advance or cash advance is a short-term loan that is intended to help a borrower with his/her expenses until their next paycheck. According to the Consumer Federation of America, typical payday loans vary between $100 and $1000 and average between two and four weeks. The average annual interest (APR) is estimated at 470%. Very often, the shorter the loan term the higher the interest.
How does a payday loan work?
Payday borrowers write a personal check or electronic access to their bank account for automatic withdrawal for the amount being borrowed including a finance charge. Lenders loan the borrow the amount in cash and hold the check until the borrowers next paycheck. At that time, borrowers can pay the loan off by paying the principle and finance charge, or simply the finance charge and roll the loan over to another month.
Are payday loans bad?
Although payday lending has come under controversial scrutiny in the last couple years, the truth is that there are situations when a payday loan is very helpful. However, just as with any other loan, but perhaps even more prevalent with payday loans, borrowers must practice responsible lending.
Who regulates payday lending?
Although payday lending is largely regulated at the state level, in 2006, Congress passed a regulatory law, namely The John Warner National Defense Authorization Act, capping the lending to military personnel at 36%. The Defense Department labeled the payday lending institution “predatory”. Some states, including DC and New Mexico have passed similar regulatory laws with maximum interest rates and Georgia banned payday lending entirely.
What is internet payday lending?
Internet payday lending is when a consumer or potential borrower fills out a form or online application and faxes it to the lender with the requisite information including bank account numbers and social security number, a copy of a personal check and/or bank statement. The payday loan is thereafter, directly deposited into the consumer’s account and on the due date the finance charge is automatically withdrawn by the borrower.
How much will payday loan settlement help?
While there is no way to estimate your savings, because each payday lender has unique circumstances with literally hundreds of contributing factors, payday loan settlement may reduce your monthly payments and ultimately eliminating your payday loan debt. You have nothing to lose besides 10 minutes of your time. So fill in the form and find out if we can help you get our of the cycle.
How does a payday loan consolidation program work?
Our program is designed to help you avoid enormous interest rates from renewal fees and rollover fees by attempting to settle your debts within a reasonable time frame and at a monthly payment that you can afford. It is important to note that there are many factors that go into the ability to obtain a settlement and we can not force creditors to work with us. Therefore, results may vary and not all creditors may agree to settle. When you make your monthly payments they are accumulated in your trust fund to be used for settling purposes. When a creditor agrees to a settlement we will receive it in writing and send it to you for your approval, or act on your pre-authorization. The creditor is then paid with your trust money. It may be marked on your credit report as “settled for less than the full amount” though we see more of these notations with credit card debts than we do with payday loan debts and it is possible the payday lender does not report to your credit report. Depending on the condition of your credit report at the time of enrollment a debt settlement plan may have an adverse effect on your credit report and credit score. We will be happy to help you try and remove any inaccuracies from your report during or upon completion of your program.
How can we help you to pay off less than your full debt?
In a payday loan debt settlement program and debt consolidation program we will aggressively work with your creditors in order to reach a mutually agreeable settlement or payment plan that avoids the large interest rates associated with payday loan debts. This is done through a series of negotiations, after you have saved funds, performed by professionals who are experienced in working with your creditors. Your hardship and financial situation will be explained to your payday loan lenders during the settlement process in order that a fair agreement may be reached. Keep in mind that no company or professional can promise or guarantee you that all of your accounts will settle. If they do so, this is your sign that they may not be shooting straight with you. The truth of the matter is that not all creditors will participate in negotiations. We will do our best to get you results as quickly as possible with industry experience and knowledge and not charge you for any creditors that do not agree to some sort of fair arrangement. Furthermore, all settlements will be approved (or pre-authorized) by you before they are paid.
We generally can help with any unsecured debt including, but not limited to payday loans, credit cards, medical bills, personal loans and business debts. However, every situation is different and we cannot guarantee that all creditors will agree to negotiate and/or settle. We will analyze your situations and let you know which creditors we will accept in to the program.
How will payday consolidation impact my credit score?
If you do not make required minimum payments to your creditor you may be breaking the terms of your agreement with them and your actions will can be reported to consumer reporting agencies as a late, delinquent, charged off or past due balance. This is true anytime you fail to make your minimum payments in a timely manner. After settlement your creditor may comment that the account was “settled for less than the full amount” on your credit report though we see less of this in dealing with payday loans (more often with credit cards and other types of unsecured debt). Depending on the condition of your credit report at the time of enrollment, a debt settlement plan may have an adverse effect on your credit report and credit score.
How do I check the progress of my loan consolidation?
You can do this in a few different ways…First, you can always call our customer care representatives from 9-5 EST. They can let you know your trust account balance and help you with any other questions you may have. Secondly, you may track your payments and settlement activity through this website once you become an active client. You will also receive written correspondence from your creditors when an account is successfully settled.
What happens in your free consultation session?
Your personal counselor will go through a Personal Financial Analysis with you. This analysis is a detailed session that will identify your current situation, create a game plan to help reach your financial goals and review all possible options to find the right option for you.
What happens when we reach a settlement?
Once a settlement is reached, you are notified for your approval or you will have pre-authorized the settlement in your initial agreement (this depends on the settlement specifics). If you deem the offer as acceptable, we will immediately settle with your creditor or payday lender. You will then receive written notice from your lender that the settlement has been reached and paid as agreed, and that debt will be gone forever. This may be reported to the credit bureaus by the creditor so your report will reflect a zero balance on that debt.
What happens if I miss a monthly payment?
We may not drop you from the program for missing one payment. Our company understands that circumstances may arise and our main focus is to help you get back on track. The key to working through these times is communication. Simply let us know your situation, and together we will make reasonable arrangements to get you caught up. Keep in mind, If more than one payment is missed we may conclude that this program may not be right for you and your account may be terminated.
Are there tax consequences to debt settlement?
If your creditor settles your debt for more than $600 less than what you owed, the savings may be reported by your creditor to the IRS as Discharge of Indebtedness Income. You understand that Progressive Debt Relief assusmes that you enrolled in a payday loan consolidation consolidation program or debt settlement program because you are insolvent, having financial difficulties with your unsecured debts, and/or have used a Debt Settlement Plan to avoid filing for bankruptcy. The IRS website www.ustreas.gov says that you may be able to exlude Discharge of Indebtedness income if you are insolvent. For more information on tax ramifications to you personally please consult a tax preparer, CPA or Tax Attorney or refer to IRS Publication 908 “Bankruptcy Tax Guide” and IRS Form 982 “Reduction of Tax Attributes Due to Discharge of Indebtedness” available on the IRS website. Please remember that we are not accountants and you should consult your accountant with any questions.
Do you provide legal advice?
Progressive Debt relief does not provide legal advice or representation. Consult an attorney for legal advice and representation, including for information about whether bankruptcy is appropriate for your situation. By failing to pay creditors, you may be in violation with the terms of your agreement with your creditors, which may result in a creditor suing you.
How do I know if you will be able to settle my debts?
We do not get paid any settlement fee until we settle your debt so we certainly are motivated to get results. The acutal size of any debt reduction and the actual length of time that will be needed to negotiate a specific settlement or to complete your plan is not guaranteed. Any individual creditor may use a number of different critieria in determining that creditor’s willingness to settle a debt or the amount acceptable in settlement, including but not limited to, the amount of debt, the current status of the debt, the reasons you are seeking debt settlement, the type of debt ant the amount of your disposable income.
What are your fees?
We charge no fees for settling your loans until a debt has been successfully negotiated for you. Once you make one payment towards the negotiated debt than a service fee applies to that particular debt. The amount of the service fee depends largely on the program you choose. Once a specific program is determined, your counselor will give you the specifics of your fee structure. Often we can save you from paying back the full amount that you owe to a particular payday loan lender (after your fees), though each lender is different. We are committed to making you fully aware of any fees that would be applicable and you will find our agreements are thoroughly transparent. In respect, Progressive Debt Relief (www.paydayloansdebt.net) is committed to investing in customer service to ensure that we deliver a high quality product that creates a positive end result for our client.