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How Do I Get Rid of Payday Loans?

depressed Asian woman having problem with debt hand holding empty wallet and credit card

Payday loans can initially seem like a win-win situation: You are getting money you have already earned early, and since it is money that you already earned, you should have no problem repaying the loan once you get the paycheck. Unfortunately, payday lenders are often predatory. They tend to charge exorbitant interest rates and demand short repayment periods, leading to renewals and rollovers that increase the overall amount due and turn them into a costly cycle of loan extensions. Annual interest rates for payday loans can wind up at 400 percent or more. The Consumer Financial Protection Bureau (CFPB) had put into place protections against payday loans, but many of these provisions have been rolled back under the current administration. Continue reading for a discussion of your options for getting out of a payday loan trap. Each of the options has its own advantages, drawbacks, and potential effects on a debtor’s credit score and finances. Reach out to a seasoned Houston debt relief and consumer bankruptcy lawyer to discuss your options for a brighter financial future.

Extended Payment Plans

Payday lenders may not have your best interests at heart, but they do want to get paid. If you call and tell them you are unable to pay, you might be able to get a loan extension and even reduced terms or interest rates. It is better to speak with a supervisor, rather than a debt collector, to increase your chances of a good offer.

Some payday lenders offer defined extended payment plans (EPPs), which allow you to repay your loan over a longer period. Payday lenders who belong to the Community Financial Services Association of America (CFSAA) will typically have an EPP. Make sure you review and fully understand the terms of any EPP; get a debt relief attorney to help you. The revised plan may not be any better than your existing loan, and it might even increase the interest you owe.

Debt Consolidation Loans

Debt consolidation involves getting a new lender to issue you a new loan at a new interest rate, the proceeds of which you will use to pay off all of your existing debt–payday loans, credit card debt, etc. Ideally, the consolidation loan will have a much lower interest rate than the higher-interest short-term loans and will give you additional time for repayment.

Debt Settlement or Payday Loan Consolidation

Although they have a similar name, payday loan consolidation programs are different than debt consolidation loans. Payday loan consolidation programs, also called debt relief or debt settlement, involves having a third-party take responsibility for repaying your loans. You will then pay that third-party a monthly fee. They may even be able to negotiate with the lenders to reduce the total amount you owe. Lenders, in turn, will go to the third-party for payment and will no longer be able to undertake collection efforts against you directly (such as wage garnishment).


If other debt-relief options are not available or ideal, indebted consumers can turn to bankruptcy to get rid of payday loan debt. Most debtors will be able to get their payday loans entirely discharged in a Chapter 7 bankruptcy or will be able to include a payday loan as part of a Chapter 13 plan. So long as they are not connected to collateral and they are included on the bankruptcy petition, payday loans are unsecured debts dischargeable under Chapter 7. Under Chapter 13, payday loans will be treated like other unsecured debt and added to the repayment plan, giving the borrower additional time to repay, and likely reducing the total amount owed. A debtor may even be able to discharge part of the payday loan under a hardship provision if they are unable to keep up with payments.

If you are struggling with consumer debt, speak with a knowledgeable, dedicated, and effective Texas consumer bankruptcy and debt relief attorney at the Houston Law Office of Maria Lowry by calling 713-850-8859 today

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