Debt Consolidation > How To consolidate Payday Loans

 

How To consolidate Payday Loans. If you are unable to meet payments on your payday loans, you can consolidate and replace multiple bills with one payment each month. This will help pay your debts faster without having to write several checks per month.

Debt consolidation is primarily applicable to Internet payday loans (PDLS), i.e. remove them from online lenders. Unless you default, you can not consolidate payday loans. Here is a step by step approach on consolidating payday loans held by its creditors.

  1. Calculate the amount of debt: Find out the outstanding balance on your payday loans and other unsecured debts using the Unsecured Loan Calculator.
  2. Contact Consolidation Company: Approach a debt consolidation company which can help you consolidate payday loans (not all companies do so). The company will offer you a free debt counseling session wherein you can talk to a debt counselor about your financial problems. The debt counselor will help analyze your current financial situation and suggest whether you should go for debt consolidation program or debt settlement.
  3. Negotiate to reduce rates: The debt consolidation company will negotiate with your creditors in order to obtain lower interest rates on your payday loans. This is to make sure that you can pay off the principal loan along with reduced interest costs. Moreover, there are chances that your late payment fees can be cut down or eliminated.
  4. New payment plan: The debt consolidation company will negotiate an alternative repayment plan with your payday lenders. Prior to negotiating on your behalf, the company will help you determine the maximum monthly payment you can afford on your payday loans. The purpose is to work out a suitable plan so that you can continue making payments and get out of debt in a short time.

If your internet payday loans are sent for collections and the collection agency (CA) calls you for repayment, here’s what you should do:

  1. Verify the SOL: Check out the Statute of Limitation of the debt.
  2. Request for debt validation: If the SOL hasn’t expired, chances are that the CA may win a judgment against you and garnish your wages. So, ask the collection agency to validate your debt. Send them a debt validation letter in this regard.
  3. Consolidate and pay off debt: Once the debt is validated, try to consolidate the payday loans in order to get out of debt faster. Repeat steps 1 to 4 as given above. Here the negotiation should be done with the collection agency and not the original creditor as because he doesn’t hold the debt any longer.

Once the SOL expires, the collection agency can not win a lawsuit against you, even if you do not pay the outstanding debt. But this does not mean you do not owe the debt. The collection agency may try out means to collect it from you. You can send a cease and desist letter asking them to stop communicating with you. Or you can pay (consolidate payday loans or settle the debt) of the outstanding debt and the release of its obligation. But the SOL is restarted once you start making payments.