Don’t do it!!
Ok, that might have been TOO quick. Let me go ahead and elaborate a bit.
Debt consolidation services simply seek out your business to capitalize on your situation, and in most cases do what you could do for yourself for free!! For example, a recent article at the payday pundit mentions a recent piece with Mary Hulburt from Consumer Credit Counseling Services, in which she discusses payday lending. CCCS is a group which often times portrays itself as “protecting” borrowers (this term is very popular recently!) by helping them get out of debt.
The truth is, when it comes to payday lending debt, you have options! I have yet to see a single case in which these Consolidation services have actually saved a payday lending customer money. I have however witnessed many cases of customers paying for a service which they did not need, on top of the debt they already have.
If you ever find yourself in a situation which you are unable to pay back your payday loan on time, I would advise you to do/not do the following….
-DO NOT under any circumstances take out another loan to pay off a loan that you cannot afford!! Things may seem “hopeless” when you can’t pay off the payday loan you took out when you were already in a bind, but don’t make things worse by entering the debt trap. Debt traps aren’t traps at all, and they don’t just “happen”. The so called “debt trap”, which represents a hopeless downward spiral of loans and fees which you cannot ever pay off, happens when someone WILLFULLY as a grown adult makes the decision to sign a contract promising to pay back “x” amount for a loan when they know they cannot afford it. Either that, or they didn’t take the time to understand what would happen to their interest. Simple, don’t borrow what you can’t pay back!
-If you do find yourself in the situation where you cannot pay back a loan, contact your lender and discuss “payment plan” options. Most will work with you, as opposed to risk that you default completely on the loan.
-Contact a state regulator to discuss you rights as a borrower.
Do not pay a third party to “help”. If you are in debt, paying more will not help. The idea of consolidating your payments and paying a lower fee SOUNDS great! It is meant to. Just remember, anyone offering a loan or consolidation will take care of their interests first so make sure you understand all of the implications of a loan before signing. Most likely, if you are in debt already, you can find better options yourself and for free.
