Payday loans are small amounts of financing provided for the short-term. People who are in dire financial situations often use these loans to pay emergency expenses. Others use them to cover daily living costs, sometimes sinking themselves into pits of debt.
Those who struggle to pay bills when employed find themselves in much more serious situations when they lose their jobs. One payday loan may be used to pay off another, carrying the balance and increasing the amount of interest.
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When payday borrowers are unable to repay their loans, they have few options other than to default on the current loan or take out a new loan to repay the existing one. Payday lenders are familiar with the story of the unemployed borrower and they have no sympathy.
They want their money and leniency is not something they are willing to provide to borrowers. This makes things much more difficult for unemployed individuals with payday loan balances.
Fortunately, free debt advice is available from a number of UK agencies. Consumer Credit Counselling Service, Citizens Advice Bureau, and Debt Advice Foundation are just three sources for free and confidential debt advice. These and other groups maintain websites that feature useful information, resources, and debt management tools and publications. As soon as they find themselves getting into financial trouble, UK residents should consult with a debt expert at one of these agencies.
Debt management professionals are able to help consumers with various amounts of debt. They review the financial situation of each individual and recommend a customized solution. Debt management plans are popular for people with non-priority debts including credit card and store card balances, overdrafts, and payday loans. The process involves using a third-party debt management company to negotiate with creditors and manage debt payments.
Consumers may be able to use a debt management plan to freeze interest and other charges on their payday loans. They repay the loan balance over an agreed period, making a single monthly payment for all debts, which the debt management company divides amongst the payday lender and other covered creditors. This is a fast and easy way for consumers to become debt-free without having to resort to more severe actions like bankruptcy.
Debts are repaid in full through this plan so it is not recommended for people who want to write off some or all of their debts. Whether this tool is useful for an unemployed individual will depend on the amount owed to the payday lender and savings that have accumulated. A creditor will only agree to the plan if it believes it will receive more money than it would through other debt repayment options.
Being out of work can be very stressful because bills may be unaffordable. Addressing debt before the situation becomes serious increases the options for handling it. Unemployed payday loan borrowers should get free debt help and pursue the debt management solution that is most suitable for their financial situation. Getting back on their feet financially is the first step toward a positive future.