Once again consumer advocates call for the abolition of payday loans, citing the financial misery they cause to those trapped in the cycle of payday loan debt. However, those who are juggling several payday loans and become caught up in a trap have used the loans irresponsibly and are not the victims that their advocates would have us believe. What they must do is stand up and address the problem head-on before it spirals completely out of control.
The facts are that payday loans are now, for the most part, regulated. They are intended to be taken out as an emergency source of funding, but all too often the borrower fails to meet the agreed payment on time and thus runs up further fees allowing the amount owed to escalate. In some cases, the problem is simply compounded as the borrower takes out a new payday loan to pay the first one, and ultimately ends up spending more on loan fee repayments than on addressing the principal loan which never seems to reduce.
The first way to tackle this debt is to speak to the lender directly and see if you can come to an agreed repayment plan. Explain the situation you have put yourself in and see if the lender will agree to a payment plan to allow repayments to go towards reducing the principal, with interest frozen. Do not make the situation worse by taking out another payday loan.
If the interest is escalating out of control then take any measures you can to raise the funds to simply clear the full debt, as the longer the debt continues to accrue interest the more impossible it is going to become. As those who generally resort to payday loans do not have credit facilities available to them there is no likely opportunity of utilising credit to pay off the loans.
Having a current checking account is a requirement for taking a payday loan so it is worth approaching the bank and raising the possibility of a debt consolidation loan. You should be honest about the situation and only borrow as much as you need to repay the debt, and then stick to the repayment terms of the consolidation loan if you are able to obtain one. This is only a sensible option if you have the willpower not to immediately fall back into the same cycle again and take out another payday loan.
Another option is to ask for help from your employer. Your employer may be willing to advance the funds to clear the debt and then deduct a set amount from your weekly wages until the wage advance is repaid. Once again though this will only be effective if you can stay away from payday loans in the interim, and indeed for good. The problem for many when this happens is that living from payday loan to payday loan has become a way of life, and it is easier to take an easy borrowing route than to simply cut right back and do without until finances are better under control.
This type of debt cycle is always going to be a reality for those who have few financial choices and are woefully uneducated about the financial products they use. Ultimately the most likely scenario is that as soon as the payday loan debt has been addressed and cleared the borrower will already be indebted again to a new lender of similar ilk. If you are in this position all you can do is learn from your mistakes and try to be the statistic that breaks the cycle and settle into living within your means.