As millions of Americans struggle to make ends meet, the need for immediate cash is one that many people share. While some choose to pawn personal items or seek the assistance of a family member, many others choose to get cash advances in the form of payday loans. Low-income families most commonly utilize this service as there is no credit check required and they are easy to obtain, but are they really as beneficial as they are made out to be?
The Payday Loan Process
The process of getting a payday loan goes as follows: an individual fills out an application (either electronic or on location), provides personal information (contact, income, and banking info), submits the application, and waits to receive the approved amount from the lender. Once approved, the person writes a postdated check to the lender that equals the sum of the loan plus interest. The repayment date typically reflects when the borrower gets paid.
When loan repayment is due, the loan recipient can go into the store to pay off the loan. If that isn’t possible, the lender can deposit the check directly into their bank. If a situation arises where the borrower cannot make the payment on time, they can extend the loan period which often involves additional fees. While payday loans themselves can be a viable option for immediate funds, failure to make a timely payment can have irreversible consequences.
Financial Hardships
Payday loans are unlike any other. With finance charges ranging anywhere between $15 to $30 for every $100 borrowed, the annual percentage rate can get as high as 780%. Being that most payday loan centers hold checks as a form of loan payment, the bank applies a fee whenever a check bounces. This is in addition to the charges implemented by the payday loan center for an extended repayment period.
Borrowers can quickly find themselves in an uncontrollable situation where the funds needed to pay off a payday loan exceeds how much they make; ultimately putting them in a position where they need to take out a loan to pay a loan.
Potential Legal Issues
Defaulting on a payday loan can be grounds for the lender to pursue legal action. As long as the statute of limitations has not come and gone, they have the right to sue an individual for the amount owed, including interest and fees. Failure to respond to a court issued notice can result in a default judgment in favor of the plaintiff, thus permitting wage garnishment and the ability to freeze bank accounts.
Payday loans may seem convenient at the moment, but they can potentially dig you deeper into debt. If you are one of the many Americans who has fallen victim to the appeal of payday loans and found yourself buried in debt, trust a Louisiana bankruptcy attorney to help you through this tough time.
Orum Young Law Offices has filed the most bankruptcies in Northeast Louisiana and can help you get your life back. Our attorneys can discuss which bankruptcy is most appropriate for you and take the necessary ensuing legal steps. Our Trial Guarantee ensures that we will take your case to trial per your request. Contact us today for a free case evaluation.
