Payday Loans are either a life saver or a life changer. They can quickly turn into your worst enemy despite the fact that when you first met them, they got you out of a sticky situation.
The problem with Payday Loans is that they are very expensive and they can leave you in a much worse position than when you started.
You may find you take on additional Payday Loans to make ends meet but eventually you end up in such a mess that you cannot go on.
Conversely you could end up rolling over a loan every month because you are unable to pay it back. Either way you can end up trapped in a never ending cycle.
Setting up Repayment Plans
As I have mentioned elsewhere on this blog, I found it very difficult to set up arrangements to pay back my Payday Loan accounts. I was either ignored or my requests were rejected with impossible schedules proposed to settle the outstanding debts.
The only plan I managed to successfully set up was with Wonga. But that was only after I e-mailed their CEO to complain about how difficult it was. I was assured that this has changed but I don’t know if that is the case or not.
So what do you do when you find you can’t pay back your payday loans?
Today you are supposed to be able to cancel something called continuous payment authority. This is supposed to prevent instances of where your bank account is emptied by a Payday Lender. You also have the right to withdraw this authority by contacting the payday loan lender as well.
Having searched through various forums on the Internet, I have found that this doesn’t always happen and there are a number of examples of where a customer cancelled the CPA and yet they were still finding money leaving their accounts.
If you have a direct debit then you are also able to cancel that as well. First of all though, contact the payday lender to tell them that you are unable to pay off the loan. Work from there as to how you wish to proceed, be it offering a payment plan or coming to some arrangement to settle the loan next month.
Be advised though that your credit rating could be affected so you need to think carefully about how you wish to proceed. They may also constantly phone you chasing payment even though you have explained you cannot pay. It can be quite stressful.
I think personally that the only safe option is to move to a completely different bank and open a new bank account. It is a lot of work but it is something that you can do for peace of mind. That’s what I did because back when I defaulted on all my payday loans, I did not know about this CPA and my rights.
What if you cancelled CPA and still find your bank account being debited?
Contact your bank and the lender and demand that the money taken is returned immediately.
Setting up a payment plan for your payday loan accounts?
In the first instance you should write to the original lender and make your proposal to repay the payday loan. For example if you owed £300 you might offer to pay this back over a period of three months. Make sure you ask for any interest and charges to be frozen.
– An example offer of repayment letter can be found here.
You could also try and make a settlement offer, so for example you might offer £220 on a £300 account to settle the matter in full.
– An example Full and Final Settlement letter can be found here.
The Payday Lender is ignoring me
If you are being ignored, keep contacting the payday loan lenders reminding them that you are trying to reach an agreement to settle the account.
If they are unwilling to help then the next step is that they would normally refer the account to a debt collection agency. This usually takes place between three to six months after the original balance was due. Expect to receive a lot of phone calls and letters. Even though you are trying to sort things out. Ridiculous I know and it is something that needs to be addressed. You could also make a complaint to the Financial Ombudsman if you like as well.
When my payday loan accounts were referred to debt collection agencies, I found it easy to set up arrangements to pay and I am still making payments to this day. The only negative I see is that some of my Payday Loan lenders have issued a default marker on my credit report.
I am not bothered by this because I am already in a financial mess but if you only have problems with payday loans then I would suggest doing all you can to pay them back, so you don’t damage your credit rating.
– Ways you could pay off your payday loans
Help, it is all too much for me
If you are struggling with your payday loan debts then please get help as soon as you can. Visit the Get Debt Help section of this blog to see a list of organisations who can help you with your debt problems.
The above organisations will take a look at your situation and should be able to help you with your debt problems. Good luck.
