The name might be confusing for people who have not faced any financial problems. A payday loan is a short term loan which is due when you get your next paycheque. Most of the times, the loan is taken due to some financial problem causing an unexpected increase in expenses (medical ailments, etc.) It is a difficult time as once you have taken a payday loan, you are continuously living in the terror of harassing debt collectors. You also constantly worry whether you will be able to make essential payments like bills etc., have enough to eat while staying “current” on your payday loan.
Payday loans have some of the highest interest rates. The typical fee charged on every $100 range from 10-25 dollars, equivalent to 350% annual interest! Despite various efforts to lower the rates, nothing much has been accomplished. According to Bankruptcy Attorney Los Angeles, these loans are not the solution to your financial problems as paying them off is nearly always impossible. If you make these loans your priority, you will end up defaulting on some other. Los Angeles based law firm Recovery Law Group informs that in case you are late in making payments on a payday loan, the loan amount becomes huge. Interest owed is added to the principal amount which makes it staggering by the time your next pay cheque is due! All this time, there is no respite from the loan collectors.
There is some silver lining though. On consulting with bankruptcy lawyers, you will get to know that these debts are treated similar to other unsecured chargeable debts in most bankruptcy cases. Thus filing for bankruptcy can easily help eliminate them! Since bankruptcy seems to be a good option to get out of the vicious cycle of loan that payday loan creates, it is important that you consult bankruptcy lawyers near me to weigh your options at the earliest.