Payday loans have become slightly notorious for encouraging those on low incomes and with poor credit to get into even more financial difficulty, thanks to exorbitant interest rates and the potential of getting into a never-ending cycle of borrowing and repaying constantly. While the model isn’t perfect and has, indeed, lead to increased debt and even bankruptcy for some users, others cite the small dollar loan as being a lifesaver when an emergency situation requires funds that aren’t otherwise available. Whatever your view on small dollar loads, they’re a valuable resource to quite a few Americans, but could soon be forced to come to an end.
The Consumer Financial Protection Bureau recently, and very unexpectedly, announced that it intended to reopen a block payday loans, also known as small dollar loans. These loans, typically amounting to between $100 and $500, carry hefty interest rates and stiff penalties for late repayment, frequently leading to significant debt problems for the low income or unbanked individuals that tend to opt for them.
Should the proposed changes be made law, it’s predicted that a large proportion of lenders offering these loans would be forced out of business, reducing the amount of credit potentially available to people facing expensive emergencies. However, at a typical cost of 15% for a two-week payday loan, it’s easy to see why lending can spiral and bankruptcies can follow. While most people who’ve available of a small dollar loan have said they appreciated the option being available to them, there’s also a valid argument for blocking them. The consumers currently benefitting from these payday loans would, however, then be left without a viable alternative. To offer an argument for keeping payday loans, it has been proven that, in states where small-dollar loans are already prohibited, a lot more people are bouncing checks and missing payments.
It seems, like so many issues we may face in our lives, there’s no simple right or wrong answer to this one.
Falling on hard times can be a very difficult experience, in emotional terms as much as financial. As you may have learned the hard way, it can be incredibly easy to get into debt, but significantly more difficult to get out of it. You fall behind on a few payments, creditors start hounding you for money while adding numerous charges that make the balance unpayable… and so the cycle begins.
Salt Lake City bankruptcy attorney Justin M. Myers understands the emotional impact of debt and potential bankruptcy. Don’t shoulder the burden of harassment from creditors by yourself, get some help from a legal professional with extensive experience and a proven track record of success. There are solutions, and this Salt Lake City legal team will work diligently and efficiently to find the best option for you.
To arrange a free consultation and find out how a Salt Lake City bankruptcy attorney could help you tackle that overwhelming debt, call us today on 1-801-505-9679.