Got Payday Loan Debt you can’t repay? You are not alone. You may start out thinking I’ll only take out one loan, so I can pay the rent, buy groceries or make a bill payment, but the problem is paying back the payday lender the loan, plus such high interest, leaves you short money again on your next pay. Next thing you know you end up in debt to several payday lenders or take out a high-cost installment loan and you can’t keep up with the payments. If you have other debts besides your payday loans, it can be hard to break the cycle.
If you owe money on payday loans, credit cards and other debts, it’s time to get Payday Debt Relief help.
Here are the Options to Eliminate or Reduce Payday Loan Debt
1- File Bankruptcy
Payday loans are a short-term, unsecured loan available to those with poor credit or who need quick access to cash to pay a bill.
Because they are an unsecured debt, payday loans are dischargeable under the Bankruptcy & Insolvency Act in Canada meaning payday loans, along with your other unsecured debt, can be eliminated when you file bankruptcy.
2- File a Consumer Proposal
A consumer proposal will also eliminate payday loan debt. A consumer proposal may be a viable alternative to deal with payday loans if:
- You have at least $10,000 in total debts including payday loans, credit cards, bill payments and bank loans
- You have an income above the government set surplus income threshold
- You have assets you wish to keep like equity in your home
Will Credit Counselling Deal with Payday Loans?
In our experience credit counselling cannot eliminate large payday loan debt.
A debt management plan, which is the program offered by credit counselling agencies, is a voluntary program. Payday lenders typically do not agree to participate because they are not willing to waive such high interest on their loans and they are not willing to take payment voluntarily over 4 to 5 years.
A Consumer Proposal is generally a better option than credit counselling if you have high payday loan debt, along with other debts, since it is binding on every payday lender whether they vote yes or no, if your proposal is approved.
If, like many of our clients, you are using payday loans to keep up with other debt repayment, this is a cycle that is best broken by filing insolvency with one of our Licensed Insolvency Trustees near you. We are licensed by the Government of Canada to help you with your debts.
We can help you get off the payday loan and debt cycle.