Learn How To Consolidate Payday Loan Debt
Anyone who has accumulated too much debt can consolidate payday loan debt in order to settle his or her credit account. Debt consolidation is the process of hiring a third party to negotiate a lower payment with your creditors to make it possible for you to settle your debts with a smaller amount of money. This process is one of the best and most popular debt settlement option that is available to consumers. For a person to qualify for this option his or her debt must exceed a certain amount as specified by the debt consolidation company.
When you approach a debt consolidation company your case will be assigned to a financial expert. You will be required to provide truthful information about your income expenses and total debt. The company will ask you to open a savings account with them. When you get your monthly or weekly pay you will be required to deposit a certain amount of money into the account. The funds will go towards settling your debts. Once the company takes up your case they will immediately begin negotiations with your creditor. The first thing the company will request is for the lender to stop charging interest and penalties on your account. This can reduce the amount payable quite considerably.
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Debts arising from payday loans can increase exponentially when they are not settled at the end of the month. This is because a service fee is normally charged each time the loan is rolled over to the following month. A late payment fee and other penalties may also be charged. Things can be worse if there is more than one overdue payday loan in the household. A debt consolidation company can therefore be of great help because they can ask the lender to stop charging penalties service fees and other charges on the account.
Once the funds in your savings account accumulate to a certain amount the company will start negotiating with your creditors. What these companies normally do is they ask creditors to accept a lower sum as full payment for the outstanding debt. Once creditors accept the reduced payment your savings will be forwarded to the payday lender. Consequently your credit account will be marked as cleared. This payment will also be reported to credit reference agencies.
One of the main reasons why you should consolidate payday loan debt is because the process will help you to get rid of your bad debts so that you can start life afresh on a clean slate. Furthermore your creditors will recall the collection agency they may have hired to go after you. The threatening phone calls emails and house calls will also stop. Moreover the amount you will finally pay to settle the credit account will be much less than what the account has accumulated so far.
When looking for a payday loan consolidation company you may want to give strong consideration to companies that charge the lowest fees. The right firm should also have many years experience helping consumers consolidate their debts. Always remember to visit the Better Business Bureau website to see the rating of a company before you decide to hire their services.