How to deal with Payday Loan Debt

A payday loan should be treated like any other loan even if it might not be of similar magnitude. It is a priority debt and should be dealt with first. Remember there are consequences if you do not repay the loan. Every Payday lender has their way of debt collection and might include among other things;

• Calling your home incessantly and threatening legal action.

• Harassing your referees by calling them frequently.

•  Harassment at work by sending frequent reminders about your loan obligation through your bosses or work colleagues. 

• A payday lender might hire a debt collector to recover their money. Very often debtor collectors use unlawful means to recover money from borrowers. It should never get to this!

It is advisable to honor your obligation as quickly as possible to prevent escalating your situation. Once your debt is turned over to a debt collector, it becomes a different ball game. Expect more "harassment" and possibly legal action. But there are steps you can take to avoid your situation from escalation cited as follows;

1. Never take out a payday loan if you do not have an urgent financial emergency. Payday loans are a high cost line of credit and should be considered as a last resort. Do so only if you must!

2. Try as much as possible to clear off the debt before the due debt to avoid surcharges from the lender. The best way to avoid this is to authorize an automatic deduction from your account or credit card by the due date.

3. If you took out a payday loan and do not envisage having sufficient funds on your account by the due date, drop by the payday lender's office and negotiate on a work around. If possible ask for an extension or give them an offer to pay off part of the accrued amount. Don't wait for the lender to come after you once the due date expires. It shows you are willing to repay the loan. Be very honest in your negotiations! Do not ask for an extension just to get some relief! 

4. If you can access an overdraft from your bank, allow the payday lender to overdraw your account.  An overdraft has much lower charges than a payday loan except that you might be restricted on how much your account is overdrawn. Otherwise, go for it!

5. Negotiate a totally new deal with new terms and conditions. If for some reason you are unable to pay off the loan as per contract, discuss with the lender for; a reduction on loan charges and interest, or an installment payment plan.

6. Seek help from colleagues, friends and relatives. Sometimes you might just have to shed your pride and ask for help. But do not ask to be given, explain you financial situation to them and promise to payback once you get back on your feet. 

7. File for bankruptcy? You should never get to this point because being bankrupt is worse than being indebted. Doing business and other financial dealings become very costly once you are declared bankrupt. But if in the foreseeable future you do not see any relief and you have exhausted all other options, it's the only option left to you.