Payday Loan Debt Relief – What Are Your Options?
As many as 1 in 10 Canadians use payday loans as a means to make ends meet on a regular basis.
A payday loan can seem like a quick and convenient way to borrow money when cash is a little low.
But using payday loans often leads to a never-ending debt cycle.
The dillema is common – rent is due and you won’t be paid in time to have enough cash to cover your rent or you need groceries and don’t have the cash to cover the food bill.
A payday loan sounds like a perfect solution to the crisis.
However do you fully understand the implications of using payday loans?
Frequent use of payday loans is often a prime indicator of debt problems for Canadian families.
The High Cost of Using Payday Loans
The cost of borrowing for a payday loan can seem low – you pay about $15 to borrow $100.
Sounds fairly simple and low cost.
But did you know that the annual interest rates for these costs would be 390%?
Before you start using payday loans – which often becomes a vicious debt cycle – make sure you have a full understanding of all of the costs involved.
Avoid using payday loan rollovers – taking out a second payday loan before paying off the first.
While laws limit the same company from offering payday loan rollovers, there is nothing preventing other companies from offering a new payday loan when you already owe another payday loan company.
Payday Loans & Bankruptcy
Unfortunately many debtors who end up going bankrupt owe money on payday loans. In addition, these bankrupts often owe several weeks’ worth of pay to multiple payday loan companies.
Debtors Rights Related to Payday Loans
The maximum cost for borrowing on a payday loan is $15 for every $100 borrowed;
You are not permitted to get a new payday loan with the same lender until your existing payday loan is fully paid off;
There is a “cooling off period”, which is a 2 day period to allow you to cancel your payday loan without a penalty;
What are the Alternatives to a Payday Loan?
There are several alternatives to using a payday loan that a debtor in Manitoba can use.
The most important thing to do is to build an emergency fund.
This can be challenging, although with budgeting it is possible to save extra money.
However, for debtors in an emergency situation can seek other borrowing alternatives.
If possible, you should borrow from families or friends to avoid taking on more paper debt.
If you cannot find any borrowing options, even using a credit card or overdraft protection will cost less.
Using a payday loan should only be done in an emergency situation.
Even a credit card with the highest Annual Interest Rate will have an interest rate lower than any payday loan.
Payday Loan Debt Help From Bankruptcy Manitoba
If you are struggling with payday loans as part of your overwhelming debt problems the first step to take is to contact a government Licensed Insolvency Trustee today.
You can contact one of our trustees by phone or email 24/7 to discuss your options or book an appointment to meet with one of our friendly and licensed debt relief professionals.
Owing money on payday loans, credit cards and other debts can be stressful and challenging.
It is time to find relief today!
Only a Licensed Insolvency Trustee provides all debt relief options in Manitoba.
As payday loan lending companies will not accept a voluntary debt management program you can only seek debt relief from payday loans through a consumer proposal or filing for bankruptcy.
A consumer proposal is a powerful debt relief tool that allows a Canadian debtor to settle all of their unsecured debts through an agreement with their creditors.
If a consumer proposal is not affordable for you, then as a last resort, you can declare personal bankruptcy.
If you are trapped in the vicious cycle of payday loan debt it’s time to seek professional assistance in dealing with your debt. We are here to help.