Many payday loan companies will work with you to set up a repayment plan with you and freeze the interest, particularly if you have rolled over a few times. They do this because they know that if you take them to court the judge will only rule that you pay what you can afford and their lending practises and extortionate interest rates are frowned upon by the courts. They also know that there is no point making people who take out payday loans bankrupt as they often have no assets (hence why they use these loan sharks in the first place).
Here are some steps to let you know where to start. You can find template letters to send to creditors here www.moneysavingexpert.co.uk
Step one: Pay back
who you can
If you have multiple payday loans pay back as many as you can. The fewer companies you have to deal with the better!
Step two: Don’t
let them get your hands on your money
Cancel all debit cards and direct debits to do with the company. If you they have your debit card details some companies repeatedly charge the card for increasing small amounts until they have emptied your account.
Step three: Get
help
Speak to the Consumer Credit Counselling Service http://www.cccs.co.uk/ Payplan http://www.payplan.com/ or the Citizen’s Advice Bureau http://www.citizensadvice.org.uk/ for advice if you are in the UK. Most other countries will have similar organizations to help people in debt. They are all free and can give advice on budgeting and the CCCS and Payplan can set up a deby management plan whereby they negotiate with your creditors on your behalf to reduce your minimum repayments to a level that you can afford. Please note though that Payplan and CCCS insist that you are fair to ALL your creditors which means that if you have more unsecured debt like on credit cards etc they would have to be included in debt management plan that they set up.
Step four: Write to your creditor
Contact the companies in writing and send all post by
recorded delivery. Keep copies of all letters and get proof of delivery from
the Royal Mail website and keep these. If they call you on the phone politely
ask that they keep all contact via the post and make sure you reply to all
their letters, even if it is just repeating yourself so they can’t say you are
ignoring them. This is so that if they do decide to take you to court the judge
can see that you have tried to repay them.You can find template letters here www.moneysavingexpert.co.uk.
Step five: Pay
what you can afford
Even if the companies don’t accept your payment plan keep up
regular monthly payments to them. Do NOT give them your debit card details.
Request their bank details and a reference number so you can transfer the money
to them and if they don’t give them to you send a cheque or postal order. Keep
a record of what you have paid and keep all receipts and proofs of delivery.
