Part of my total outstanding debt is made up of Payday Loan Debt. Having Payday Loan debt can be very stressful, especially if you have a lot of it.
The rate the outstanding balance can increase is also quite a scary thing to see. In all I found my Payday Loan debt the most difficult debt to manage.
Once all the Payday Loan debt was passed to the Debt Collection agencies, I found life a little easier.
What I did with my Payday Loan Debt
As I mention in my About page, I came to the realisation one day that I could not continue with the way things were going. I was up to my eyeballs in debt. I also owed money to a number of payday lenders.
There was no way I would be able to service the interest charges and be able to repay all of these payday loans off in full. It would have taken me too long, and cost me an arm and a leg in the process.
Instead I decided that I would stop making my payments and see what would happen. To ensure my money was safe, I also opened a new Bank Account and had my salary paid in to there. The only thing left to do was to cancel the debit card with my old bank, and make sure no new direct debits had been set up.
Arranging Repayment Plans for my Payday Loans
I did try to set up repayment plans with my payday loan lenders. However I found it a very frustrating experience. Issues occurred such as: –
1. Being told I had to clear the balance over three months.
2. Being told to call in to discuss the account, despite me providing everything they would ever need in writing.
3. Being completely ignored.
4. Being charged ridiculous amounts of interest meaning any payment I made would not reduce the balance.
In the end I just let them all stew, with one exception. I did manage to set up a repayment plan with Wonga. I shall write about this in a separate post.
Dealing with the Debt Collection Agencies
Once my accounts had been outstanding for three to six months, they had all been passed to external debt collectors. At this point I knew I shouldn’t have too much trouble setting up a repayment plan.
I bundled all my Payday Loan debt into my Debt Management Plan, and made pro rated repayment offers calculated by the plan.
I sent off an Income and Expenditure Form and a Letter offering Repayment. As expected my proposals were all accepted and I am still repaying the accounts today. In fact it will take me six years to settle all these accounts. However I think it will take me less time as I aim to settle them all in full before then.
Damage to my Credit Rating
Unfortunately doing what I did means I now have several defaults from the Payday Loan Lenders I used. However I felt it was a small price to pay to get out of my Payday Loan Debt. These defaults will be gone in six years. Hopefully long enough for me to never make the same mistakes again.
The alternative option was rolling over these payday loans for a very long time, paying off huge amounts of interest before settling them. As I was already in a financial mess, I just decided one mass default was in order.
If you are struggling with Payday Loan Debt please visit the Debt Help Section of this blog.