Avoid Payday Loans
No matter how broke or in debt you might be, it’s wisest to avoid entirely what are called “payday” loans. Also called “cash advances” or check loans, these are short-term loans, usually for $500 or less, with exorbitant interest rates. The loans are typically made to borrowers with weak credit or low incomes, and the storefront businesses that offer the loans are usually set in depressed inner city areas or near military bases. The equivalent annual interest rates routinely run over 100 percent. If you’re even considering taking a payday loan, your financial trouble is probably extensive. Instead of a payday loan, find another way to handle financial trouble. In the Chicago area, you can get trustworthy advice and recommendations by speaking at once with an experienced Chicago bankruptcy lawyer.
About half of all payday loans are made to people who extend the loans so many times they end up paying more in fees than the original amount they borrowed, according to a report published earlier this year by the Consumer Financial Protection Bureau (CFPB). The loans work like this: You need cash now, but you won’t receive a paycheck for a week or two. You write a check dated for your payday and give it to the lender. You get your cash, minus interest. On your payday, the lender cashes your check or charges you additional interest to extend or “roll over” the loan for another pay period. The CFPB report was based on about 12 million payday loans in 30 states in 2011 and 2012. The report also shows that only 15 percent of borrowers repay all their payday debts on time without borrowing again within 14 days.
If your debts are mounting, payday loans are not the answer; in fact, they may be part of the problem. Bankruptcy is not an answer for everyone either, but it might be right for you, and you have other alternatives as well. Call a good Chicago bankruptcy lawyer today if you’re anywhere in the Chicago area, and review your options with an experienced bankruptcy lawyer who can suggest your wisest course of action.
