Consolidating payday loan debts means paying off all outstanding debts. This halts their increment and ends the harassment calls from the payday lenders. Payday loan debts occurs when people have missed their payday loan repayment deadlines; attracting late loan repayment charges and making payday lenders pursue them constantly. A person who has accumulated huge debts, from one or different payday lenders, will have to come up with a debt consolidation plan; otherwise, the debts will keep increasing and their debtors will forever be on their case.
Options of payday loan debt consolidation
There are several options that people can choose from; in their attempt to consolidate their payday loans debts. These include, but are not limited to: borrowing low interest rates from other sources, negotiating with debtors, borrowing same or high interest rate loans (as that of payday loans) with longer repayment duration, engaging payday debt consolidation company/ professional or declaring bankruptcy.
Negotiating with debtors
With very good reasons as to why one has been unable to repay their payday loans on time (such as illness, loss of a job or other emergencies), leading to debt accumulation, one can decide to negotiate with their debtors to have their interest rates reduced, their loan repayment duration increased or their interest increase/ late repayment charges reduced or done away with. Since debtors are interested in getting their money repaid, somehow, they might agree to a settlement that assures them of their money.
Low or zero interest rate loans
This is one of the best options of consolidating payday loan debt if the first option fails; that is if the source can get one enough money to repay their debts. Such sources include family, friends, work colleagues, community groups and or other lending institutions. The low interest loans will enable the person to settle their debts (halting their increase and reducing harassment from payday lenders), and give them ample time to repay the now low interest rate loans.
Same or high interest rates
People can also take high or equal interest rate loans (to that of the overdue payday loans) to consolidate their debts. The logic behind this option is that once one gets the new loans and repays his/her debtors; getting both debtors and debts out of their way. The creditor will then have more, and peaceful, time to repay the new loans. The high interest rates may not seem that much, in the first place, as one might have a good reason why they had failed to meet their loan repayment deadline leading to their debt accumulation.
Payday loan debt consolidation companies
Sometimes, it is very hard to find people or institutions that are willing to lend people money just to repay their overdue or outstanding loans. Many lenders would rather lend people money if they are assured it is being invested; hence its repayment guaranteed. Should all the other options of debt consolidation fail, or if one has more than one debtor to deal with, a debt consolidation professional or company would be of great help. These specialize in helping people settle their payday loan debts by negotiating with debtors on behalf of creditors, or lending creditors money to settle their debts then deal with only them.
Consolidating payday debt with debt consolidation companies requires the creditor to halt their repayment (which, unfortunately, does not reflect well on their credit) to create an impression of being unable to repay their loans. The consolidating company then goes into negotiations with one’s debtors; to try and have part or the whole of the debts cancelled or forgiven. These companies do not carry their services free of charge; some charge a flat rate fee while others charge a percentage of the forgiven debt.