Q:

How do you get out of payday loan debt?

A:

Quick Answer

To get out of payday loan debt, avoid obtaining another payday loan to pay the previous one, and talk to the lender about repaying in installments, recommends PayDayLoanInfo.org from Consumer Federation of America. Ask advice from your banker on whether to close your account to stop constant penalty fees.

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Full Answer

Ask help from your state regulator if the lender declines to set up payment arrangements involving installments, suggests Consumer Federation of America. If your contract contains a voluntary wage assignment clause, request the lender through formal writing to cancel the agreement, thus preventing the lender from collecting your earnings from your employer without court approval.

Because lenders require checks or debits to secure payday loans, it helps to close your existing account and open a new one to control your loan payments and avoid incurring further fees associated with repeated attempts to collect on the checks, explains Consumer Federation of America. Opening a new account also avoids the risk of having an account closed due to repeated overdrafts, which makes it difficult to acquire a checking account for several years. Seek assistance from your bank or credit union in stopping your lender from electronically accessing your bank account. It also helps to create an emergency fund and set a monthly budget to avoid the need for more payday loans.

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