If you are one of the millions of
Americans drowning in payday loan debt, chances are you have probably already
considered seeking help from a consolidation company. You have done all the
work you had to do to gain the upper hand against your payday lenders: researched
online for a good and reliable company, filled out all the paperwork, and
finally, you are ready to get your finances back in control. Then suddenly,
your lenders tell you something that stops you in your tracks. One simple
statement that can make anyone in debt feel completely hopeless: "We do
NOT work with consolidation companies."
Is this true? If payday lenders do
not work with consolidation companies, then why do they even exist? Here are
the three main reasons why your lenders will eventually work with your
consolidation company.
1. Before you enroll in a debt help
program, the first thing that payday loan consolidation companies will advise
you to do is to close the bank account that your lenders have access to.
Although consolidation companies send legal documents to your payday lenders to
revoke their authorization to automatically debit your bank account, it is
necessary that you close your bank account to make sure that there are no
unauthorized charges coming out of your account.
2. Your payday loan consolidation
company will also send legal documents to your payday lenders to cease and
desist further communications with you. According to the Federal Trade
Commission, lenders have to follow certain rules and regulations when
collecting debt. If your payday lenders do not follow these rules and continue
to make harassing phone calls, your lenders can be fined $1,000 per EACH phone
call that they make. Because most loans are small amounts (between
$200-$1,000), calling you becomes a risk that is just not worth taking.
3. Many are afraid that they will
get sued if they do not pay off payday loans. Majority of borrowers do not know
that most payday lenders (especially Internet-based) are not licensed to lend
money to people residing in the United States. This means payday lenders do not
have the ability to take non-paying customers to small claims court for a
payday loan. Payday lenders often use this tactic to scare borrowers into
paying them, and is effective because most customers are not well-informed
about what lenders can and cannot do.
Now, sit back and think of this for
a moment: Your payday lenders cannot debit your bank account for payment,
cannot call you to ask for money, and cannot sue you for the unpaid loan. How
else will they get paid? Who else can they turn to? There is only one answer:
payday loan consolidation companies.
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