How to Get Rid of Payday Loans with a 5 Step Plan to Escape the Cycle
Getting Out of Payday Loan Debt Once and for All
Payday loans are hailed as an easy solution to money worries but, in reality, they’re one of the easiest ways to build up unmanageable debt.
As the industry continues to grow rapidly, an increasing number of people are getting trapped into a cycle of debt. Fortunately, there is a way out.
If you want to escape the high interest rates, burdensome repayment plans and on-going worry associated with payday loans, start working through a five-step plan for success now:
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1. Create a budget
If you’re dealing with a large amount of debt, chances are you don’t have a realistic budget in place. You might have a vague idea about how much you’ve got coming in and going out but there’s a good chance the true figures are significantly different.
Before you can resolve any of your money issues or debt problems, you need to really understand your own financial situation. This means taking the time to prepare an accurate and detailed budget. Using your payslips, bank statements and credit card bills, sit down and track where money goes every month. By recording this information, you can create your own personal budget and begin to really understand where your money is going.
2. Communicate with your creditors
Once you have your budget in place, you’ll be able to calculate how much you can afford to pay towards your debts each month. If it’s less than the agreed minimum repayment, there’s no need to panic. Contact your creditors, including payday loan providers, and discuss your situation with them. Ask them to lower your minimum repayments, suspend interest and charges or to lower the amount of interest you’re paying. While they might say no, many creditors are receptive when customers ask for help.
3. Open a new bank account
When you sign up for a payday loan, the contract usually includes a clause that allows the lender to take funds from your bank account in order to repay the debt. This means you may struggle to pay for essential costs if your creditors start taking money directly from your account.
If you open a new bank account with a different financial institution, however, you can prevent creditors from gaining access to your funds. Although you’ll still be liable for the debt, this approach will help to ensure that you can still fund essential expenditure while your debt problems are being resolved.
4. Educate yourself
Learn as much as you can about financial products and payday lenders. Most people don’t realize just how high payday loan interest rates are in comparison to standard consumer credit options, which is one of the reasons so many people get into debt. Sadly, confusion surrounding the industry means that too many people are faced with spiralling debts. By learning more, you can find out how to get rid of payday loans and what debt solutions are available to you. You can even determine whether some or all of your debts can be written off when you file a consumer proposal or bankruptcy, so it’s always worth learning more about the finance sector.
5. Prepare for emergencies
An emergency can strike at any time, so try to ensure you have some funds set aside for unexpected costs. It’s easy to spend every last cent when you’re trying to pay off debts, but this could be problematic if an emergency crops up. Factor emergency expenditure into your budget and you’ll have peace of mind that you’re able to cope with unforeseen situations as they arise.
6. Ask for help
You don’t have to deal with debt issues alone, so be sure to ask for help when you need it. From emotional support to practical assistance, there are a variety of organizations on hand to provide the bespoke advice and help you need. With debt solutions, such as consumer proposals or bankruptcy, you could even have your debts written off and your financial future reset.
Contact Bankruptcy Canada Now
We’ve already helped more than 200,000 people overcome debt problems and you could be next. If you want to escape the cycle of payday loan debt, talk to a licensed insolvency trustee in confidence now. Simply contact Bankruptcy Canada on (877) 879-4770 and we’ll be happy to provide the personalized advice you need.
Information on Consumer Proposals
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What Debts are Erased in Bankruptcy?