Payday Loan Consolidation & Relief

Debt consolidation and debt settlement are two financial help options available for those who are struggling with more debt than they can repay. Often, people use these terms in the same way, as if they mean the same thing. In reality, these two solutions are very different options for debt relief.

We’ll look at what each of these options is, along with the pros and cons that come along with them.

Debt Consolidation

A debt consolidation plan combines debts from numerous creditors to instead offer a single loan that pays all of them, typically with lower monthly payments and at a reduced interest rate. Often, this option is best for those who are trying to keep up with bills for multiple payday loans, credit cards, and unsecured debts.

Debt Settlement

With a debt settlement, you’ll be negotiating with creditors to settle a debt for less than what is owed. This is most often used when there is a single substantial debt with a single creditor, although there may be options with multiple lenders, as well.

Pros and Cons of Debt Settlement

The possibility of paying less than you owe, sometimes far less, makes debt settlement an attractive option when it comes to eliminating debt. However, it’s also a risky option, and many experts in the finance field suggest you only do this as a last resort.

But how does it work?

You, or someone who is negotiating on your behalf, will make an offer to your creditor to settle the debt for less than is owed. If you owe $20,000, as an example, the offer might be to pay a lump-sum payment of $10,000. If the creditor agrees, you make the agreed upon payment, and the matter is settled … at least it should be.

The problem is that if you owe more than one creditor, you will need to go through this process with every single one. So, if you have a couple of credit cards, some bills, and other things – you will have to negotiate with every one of them until you come up with an agreement.

While this is happening, you may be accruing late fees and interest charges on the various debts. This is one of the cons to debt settlement, but it’s far from the only one that you will experience.

• Additional fees. Many debt settlement organizations will encourage you to stop payments while they negotiate. The late fees and interest will be added to the amount you already owe, making the debt even higher.
• Credit score impact. You will experience negative consequences on your credit score by choosing debt settlement. Missing payments can be a negative mark, as can paying the entire amount that you owe.
• Time frame. A debt settlement timeframe is typically fairly long, perhaps two to three years. That means late fees and penalties for these many months will be added to your owed amount.
• Credit report impact. Settling the debt, rather than paying it in full, will be placed on your credit report history for seven years. This can make it tough to get credit from other lenders if needed.
• Company Fees. The debt settlement company will require a fee, this is often a percentage of what is owed, in order to negotiate on your behalf. The fees are on average about 20 to 25% of the final settlement amount which can add up.
• No guarantee. Lenders do not have to accept settlement offers. Some of them refuse to work with debt settlement companies at all.
• Tax issues. There can be tax consequences from choosing a debt settlement. The IRS may count the amount that is forgiven as income, which you will need to list on your taxes.

Pros and Cons of Debt Consolidation

If you have a large number of bills that you need to pay each month, debt consolidation can be an option for relieving that debt. However, it only works if you can cut your spending and be responsible in the future.

This is particularly the case with credit cards and payday loans. If you fall behind on one, it is difficult to get back on track. In the event of a payday loan, this might lead to taking out another, which leads to another until the situation is far more critical than it was to begin with.

With a debt consolidation, you simplify the process of paying your bills. Rather than making multiple payments to various different creditors, you instead make a payment once a month to one person with one deadline to worry about. There are also often cost savings with this option. The one loan you still have will often have a lower interest rate and monthly payment.

However, there are cons as well. The debt is not being reduced or forgiven. That means you will still be paying off the entire amount. For those who choose to continue spending and don’t bump their payment amounts up, it can take a very long time to get out of debt. You should also be aware that with debt consolidation, it often takes two to five years to truly eliminate your debt.

Payday Loan Consolidation

For those who believe the loan consolidation may be an answer to their problems, there are specialty consolidators that work with payday loans. Often, these loans are the hardest to keep track of and pay off in a timely manner, and an organization like RealPDLHelp.com can assist you in breaking free from the cycle of payday loans.

If you think this might be an option for you, you can visit the website and sign up for a free consultation. The professionals at Real PDL Help are always willing to assist you on the way toward a financial future free to debt.

When it comes to getting out of debt, whether related to payday loans or otherwise, you need a plan. Of course, you also then need to put that plan into play. This article will assist you in determining a plan. As you use this information, you’ll want to keep an eye on your budget and make necessary adjustments. You want to be sure you aren’t overspending, as that will lead back to debt. If you don’t have an emergency stash of funds, you may want to put some money into savings, to begin with, so you have an option if something unexpected comes up.

What You Need to Start

Before you begin the process of getting yourself out of debt, you need to know where your finances currently stand. This requires a complete picture of your debt situation. Here are some things you will want to gather up prior to beginning the process:

• Your most recent statements for loans and credit cards.
• Your free annual credit report to check for accuracy and determine all your debts.
• A free credit score from somewhere like Credit Karma or Credit Sesame, where you can also find options for new lines of credit and debt consolidation.
• Your information from the National Student Data System if you have any outstanding student loans to pay off.

Document Everything

Once you have everything pulled up and accessible, it’s time to take a few moments to write everything down. This puts everything in one location so you can easily access it. It also shows you exactly what is happening, so you are sure where you stand and what you’re working with.

This document should have a list of all your debts, including the name of the creditor, the interest rate, the current balance, and your minimum monthly payment. You will also want to determine and write down how much you’ll need to zero out the debt within a certain number of years, perhaps three. This information is often found on credit card statements.

After you’ve done this, make sure to think about any loans or debts you have that may not be listed on your credit reports. This might include loans from your family or friends or amounts due on medical bills. Write it all down, just as you did with the above information.

Lower Interest Rates

High-interest rates can make your amount of debt balloon, which also makes it much harder to pay off. One of the ways to cut your debt down is to look at lowering your interest rates. There are a few different ways to do this.

• Determine whether you might qualify for better interest rates on your current credit cards. This is based on your credit, and while you may not think you will qualify, it’s always better to be sure. Just call up your credit card issuers and ask about lower rates.
• As mentioned above, join a credit monitoring service like Credit Karma. You can see what low rate balance transfer credit cards are available to you. These can cut down the amount that you need to pay, allowing you to leave debt quicker.
• For those who have student loans, consider loan consolidation. You can also research the different income-based repayment plans that are available to you. Sometimes you can bring that payment down quite a bit, leaving you with space in the budget to pay other things off.
• If you have a high-rate auto loan, it’s worth considering options for refinancing. This may or may not be an option for your situation, but it’s always worth finding out what is possible.
• Consider a consolidation option for payday loans that you may owe. Organizations like RealPDLHelp.com can help you bring all your payday loans together into one payment, which will often be cheaper and easier to pay on every month.

Determine Your Actual Budget Numbers

At this point, you will be aware of the total amount that you need to pay off, which allows you to make a real plan regarding how to take care of that debt. There are a few things you should do at this point. The first thing you can do is come up with a total for your payoff amount for all your credit cards and break it into monthly payments. Then you should add monthly payments for all the rest of your debts. This gives you the last number you need, your monthly payment total. This is what you’ll be paying each month to keep above water and start removing debt from your record.

Construct Your Strategy

There are many ways to handle this, and your method may not fit any of the suggestions. However, we’ll offer some options that will work for many people. You can tweak these methods to work with your favorite financial tools and approaches. Take your time when planning a strategy, as you’ll be using it for months or years as you tackle your payday loan debt.

• First things first, determine whether you can afford to pay your monthly payment total until the debt is paid off.
• If you find that you are not able to do so, consider talking to consolidation companies or working with a credit counseling agency. A bankruptcy attorney can also give you good advice.
• If the monthly payment is possible, decide which should be paid off first. This will be the debt you put extra money into until it’s paid off, at which time you’ll choose a new debt to focus on.
• Visit your bank account and set up auto pay for all of your debts, save the one you’re focusing on. Set it up so the minimum payment gets there before the due date, so you don’t run into any late fees.
• Pay whatever amount you have extra to your target debt to pay it off as quickly as you can.

At this point, you simply want to monitor your credit score and make changes as needed. Stick with your plan, and you will watch credit debt fall away for a more positive financial future. However, if you find that things are going awry, it may be time to make changes. If you require more help with payday loans, get in touch with Real PDL Help for additional assistance. Good luck!

If you are struggling with a number of credit card debts, payday loans, or other debts, one choice you may be considering is debt consolidation. Making this move allows you to pay off your loans more quickly, reduce your monthly payments, or both. But you may also wonder how debt consolidation can affect your credit score. After all, the last thing you want is to add additional damaging items to your credit report.

The truth is that the method of debt consolidation that you choose has a lot to do with what impact it will have on your credit score. We’ll explore the various options you have and how they affect your credit score. We’ll start by looking at how debt consolidation works.

The Basics of Debt Consolidation

How debt consolidation typically works is that one loan, service, or credit card will pay off multiple loans, whether payday loans, installment loans, or credit cards. Rather than making payments to many creditors in the average month, you’ll instead make one payment to the debt consolidation organization. Debt consolidation is known for offering you a lower interest rate, reducing your monthly payments, and even shortening the time it takes to settle your debt.

There are a few different options for consolidation, which we’ll look at.

Debt Consolidation Loan

With an installment loan, you will be able to consolidate many types of debt, including payday loans, medical bills, and credit cards. These loans will have a particular payoff date and allow you to make monthly or biweekly payments. With an installment loan, you may be able to lower your interest rate and/or reduce your monthly payments so paying things off is a bit easier.

When it comes to credit score impact, any new credit is going to pop up as a hard inquiry on your credit report. This may have a small negative impact on your score, but it’s often negligible. Then, if you use the money from that loan to pay off your debts, that will cause your credit score to go up as utilization is improved.

However, be aware that this will only improve if you leave credit cards open after paying them down. When you close them, you will have a reduced credit limit, overall. This can actually bring down your credit score even more. However, continuing to make on-time payments to your debt consolidation loan will improve your score with payment history, one of the most important factors for your credit score.

Credit Card Balance Transfer

One way to consolidate debt, provided it is only credit card debt, is by transferring your current credit card balances to a single card. This is best accomplished using a new card with a low-interest rate, with the goal of paying the balance before the introductory period ends and the interest rate jumps.

Getting a new card will initially cause a small decline in your credit score, because of the hard inquiry. It can also cause a reduction due to changes in your credit utilization ratio. Having all of the balances in one place may drive your ratio higher which does drop your score. However, making timely payments will improve your credit score over time.

Debt Management Plan

A debt management plan, or DMP, is offered by a credit counseling agency as part of a plan that will include education about personal finance. Rather than giving you a new loan, the company will negotiate with your creditors for you. You will then make a single payment to the agency, who will ensure your creditors are paid. In many cases, you may be required to close accounts to avoid getting involved in any new debt.

As far as credit scores go, enrolling in a DMP will lead to a “DMP” notation on your credit report. However, this isn’t a bad thing. If you pay the agency on time and they pay your creditors, there will be no impact on your credit score, bad, good, or otherwise. However, closing accounts can affect your score, but this can be improved as you pay on time.

Debt Settlement Program

A debt settlement program is offered by lawyers and certain specialized firms and intends to reduce the amount that you owe. When you sign up for this type of settlement program, you will stop making payments on your debts and instead make payments into an escrow account that the lawyer or firm set up for you. Once you have built up a certain amount, the firm will get in contact with your creditors and offer to make a payment to get rid of the debt. This amount of money offered is less than what is actually owed. However, there is no guarantee that a settlement negotiation will go your way.

A debt settlement program has an impact on your credit score due to the potential missed payments while negotiating the debt. After the debt is settled, this will also show up on your credit report and is negative. The reason for that is it shows you did not pay the entire amount that you owed, which lenders prefer not to see.

Comparing Your Options

To sum it all up, a debt consolidation loan may cause a minor short-term drop due to a hard inquiry, but it will provide a boost from on-time payments and another potential boost from improved credit utilization ratio.

A credit card balance transfer may give you a boost from on-time payments but will also have a short-term drop due to a hard inquiry, as well as a worsened credit utilization ratio.

Debt management plans can boost your credit from on-time payments, but closed accounts can minorly drop it.

A debt settlement program can cause a lower credit score due to both settling, rather than paying the entire amount, and by missing payments while things are in the works.

If you are experiencing difficulty paying back your payday loans, never fear. There are options that can help. Consider speaking with the people at RealPDLHelp.com. They can offer you assistance and provide a free consultation.