At The Law Office Of R.J.Atkinson,LLC we have counseled thousands of people with financially based legal problems throughout the State of Texas. Having filed over 1500 bankruptcy cases, we have seen a lot of people caught up in the draining cycle of payday loans. We regularly come across a significant number of people who end up with thousands of dollars in debt from payday loans. Payday loans can drain a person in need to their financial limits depending on the amount of interest question.
If you look around there are ads and offers for payday loans everywhere. Advertisements on the radio, television, the Internet, and even those in the mail promise to “help you out” when you need it most. As if they’re doing you a service by charging upwards of 700% interest in some cases. When the ads refer to payday loans you should be extremely cautious because they almost always come at a very high price. Sometimes payday loans are at such unreasonable interest rates that once the process begins it becomes a cycle of costly cash that is tough to stop.
What is a Payday Loan?
A payday loan is a small, short-term, high-rate loan which is a very expensive form of credit, that a check cashing company, check casher, or finance company will make without a credit check. They bridge a borrower’s need for cash in between their paydays and claim to be an easy solution for people in need. Payday loans also go by a variety of other names like cash advance loans, check advance loans, post-dated check loans, or deferred deposit check loans.
How do Payday Loans Work?
As an example, a person goes into a check cashing store and writes out a post-dated personal check for $130.00 to the check cashing store. The $130.00 amount is in order to borrow $100.00 for a 2 week period. The check cashing store in turn holds the check until the borrower’s next payday which is two weeks later. When the end of the two week period comes, the check cashing store deposits the personal check and makes $30.00 in profit for the 2 week loan of $100.00. In this case, that would mean that the check cashing store charged the equivalent of a 720% annual interest rate.
Now if that seems at all excessive then consider the even more costly opportunity to “refinance” so generously provided by the check cashing company at time the loan is due. A borrower usually has the option to either pay the entire amount which would be $130.00 utilizing the example above or the borrower can pay a so called fee ($30.00) to extend the loan for another 2 weeks. So, in this case, the borrower would pay $60.00 to borrow $100.00 for a total of 4 weeks.
So What is the Danger with Payday Loans?
People can sometimes become very dependent on payday loans once they start the process and they oftentimes end up taking one loan after another. Eventually, they come to a point where what started out as a simple $100.00 short term loan, has turned into a debt of $1,000.00 or more in a very short period of time. Ultimately, they are unable to pay the money back. All too often people will have more than one payday loan, borrowing from one to pay the other. And, when they can’t repay one or all their financial world quickly comes crashing down.
Is Bankruptcy a Solution to Payday Loans?
Bankruptcy certainly can be an option. Payday loans and the interest or fees associated with them are almost always dischargeable in Bankruptcy. Don’t let payday loans suck away all you hard-earned money. If payday loans and lenders holding you and your family hostage you should consider your Debt Relief options under the Bankruptcy Code. The Discharge in Bankruptcy may be of assistance with payday loans. If you qualify for Bankruptcy you may also be able to stop creditor harassment, stop foreclosure, eliminate or significantly reduce credit card debt, medical bills, and certain taxes.
Don’t Let Payday Loans Waste Your Money
If you have payday loans that are holding you hostage & ruining your life and are looking for a fresh financial start The Law Offices of R.J.Atkinson,LLC may be able to provide you Debt Relief through Bankruptcy. We represent people with financial problems in Houston, San Antonio, Austin, Dallas, and throughout the State of Texas and may be able to assist you to reduce or eliminate your Debt under the Bankruptcy Code. Please contact us at 800-436-9056 for a free initial consultation regarding your Debt. Don’t wait until it’s too late.
Payday Loan resources:
- Payday loans = Costly Cash - Publication provided by the federal trade commission about the dangers and disadvantages of "Payday" loans.
- Consumersunion.org - Various articles on the ills and dangers of Payday loans