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HOME EQUITY LOANS BECOMING UNCOLLECTIBLE
PAYDAY LOANS
Posted by: Darrell Castle
December 28, 2009
Topic: Bankruptcy
A payday loan is a small, usually $50 to $500 short term loan with a high rate of interest. There is a reason why the Federal Trade Commission calls payday loans "costly cash." According to a recent FTC consumer alert, if you borrow $100 for two weeks at a cost of $15, the actual annual percentage rate is 391 percent. If you keep rolling over the loan every time it is due at a cost of $15 each time, instead of paying it back, you will soon owe much more than the original debt despite having paid $15 every two weeks.
There are many reasons why someone would get a payday loan despite the obvious rate of interest? Many people do not understand how interest rates work and $15 seems like a small price to pay for an immediate $100 which may be desperately needed. Some people have such bad credit and have so many IOU's out to relatives that they don't have access to traditional credit. The loan is discreet and can even be hidden from a spouse. In short, it is a fast, easy, and discreet source of cash.
I, like most bankruptcy attorneys, have extensive experience with payday loans. It is quite common for bankruptcy clients to have a long list of payday loans outstanding, and sometimes those loans are the force behind the need for bankruptcy. If you are considering a payday loan or you have a payday loan outstanding, that is an indication that your financial life is seriously out of order. It means that you have no savings, that you live paycheck to paycheck, that you have no relatives or friends that you can borrow from, and that you have a need that at least occasionally requires you to spend more than you earn.
If the above description fits you, consider the services of an experienced professional such as the ones at Darrell Castle and Associates. There is no charge for a consultation to evaluation your financial condition.
