Payday Loan Collections Practices
Ever been in debt and unable to make payments? You probably already know what it’s like to deal with collections agency and their threats. Payday loan collections practices are pretty similar to other unsecured creditors. I know some people have told me some horror stories about how aggressive payday loan collection practices were, but turns out they’re really no different than other companies. Generally, if you default on your payday loan, they’ll start by sending you letters and calling you to remind you of your debt. If they begin calling your work, you can usually stop all the telephone calls by sending the company a cease and desist letter, which requires them by law to stop. If you still don’t pay, the collection agency may eventually file a lawsuit against you. State law then dictates what type of action the company can take against you, but you’ll probably be faced with wage garnishment or property liens. I’d highly recommend avoiding any kind of law suit, it will only make your credit situation worse. Even before the company starts sending you letters you should try working out a solution with them. By working with the company, you may be able to work out a payment plan to slowly pay back your loan and avoid any further problems. Of course, your best option is to never let your loan default in the first place.
Tips to Avoid Defaulting
There’s really only one good way to deal with collections and that’s to avoid ever giving them reason to contact you. I completely understand the need to take out a payday loan, I’ve used them before myself, but only when I absolutely had to. After that, I got my next paycheck and paid them back right away. You shouldn’t take out a payday loan unless you really need the money and know you can pay it back quickly. Also keep in mind that you’re basically borrowing this money from yourself because it will come out of your next paycheck. That means you might be a little strapped for cash after you pay the money back to the lender so plan your finances carefully or you’ll be borrowing again. It’s a cycle you want to avoid because all too often in ends in a debt you can’t pay back and a collections agency giving you a call. Try planning a weekly budget and follow it strictly so you know you’ll have enough money to pay back your loan. If it looks like you’re going to have trouble paying your debt back, talk to the company directly and try working out a payment plan. You might have to pay a little higher interest, but the company may give you several months to pay it all back. In the end, it all really comes down to you being responsible with your money. If you are, you’ll never have to run in to a collections agency.