The start of each new year is usually associated with new resolutions and goal setting. Many people are looking to improve both their physical and financial health. For the thousands of consumers who find themselves in payday loan debt, now is a good time to find solutions and get back on financial track. So that begs the question, is there such a thing as payday loan forgiveness?
What is Payday Loan Forgiveness?
In the most logical sense of the term, there really isn’t such a thing as total payday loan forgiveness. In some instances, an agreement can be made through debt settlement. Under debt settlement, the debtor makes an agreement with the creditor to pay off less than the total owed and have the rest of the debt forgiven. This type of agreement is usually made through debt settlement attorneys or loan forgiveness companies that negotiate with payday loan lenders on the borrower’s behalf.
Payday loan forgiveness through debt settlement might be a viable option for those struggling with accumulating payday loan debt. It could work well for individuals who have access to the cash needed to make the one-time reduced payoff amount that will satisfy the original debt. However, there are some disadvantages of debt settlement that you should be aware of:
Fees: payday loan forgiveness companies, or debt settlers, charge high fees. Fees are typically in the $500-$3,000 range or even higher and are not applied to your debt.
Credit Score Impact: debt settlement can have a negative impact on your credit score, as it should be reported by the creditor to each of the three leading credit bureaus.
Tax Implications: if a creditor agrees to settle your debt in exchange for a reduced payment, you may still be responsible for taxes on the reduced debt. In other words, the difference between the original amount owed and the reduced amount is considered taxable income. Creditors are required to notify the IRS of debt reductions of $600 or more.
Refusal of Debt Settlement: you or the company negotiating on your behalf may not be able to reach an agreement with your creditors. You might lose time and money if you are not granted payday loan forgiveness through debt settlement.
Payday Loan Consolidation as an Alternative
It is wise to evaluate all of your options when trying to resolve your payday debt. Payday loan consolidation is a popular alternative to seeking payday loan forgiveness. One of the advantages of consolidation is that the borrower can still make payments over time, rather than being required to make a lump sum payment they might not have available in order to payoff off the debt. Some of the other benefits of payday loan consolidation are:
• You will have one fixed payment on a recurring schedule, with an end date
• Lower interest rate than the original payday loan(s)
• Your credit rating is usually maintained as long as timely payments are made
Most individuals will qualify for payday loan consolidation, and it can be a viable and wise solution if you don’t have the funds to make a one-time lump payment as part of a payday loan forgiveness settlement.
The new year is the perfect time to get your financial health back on track. It is important to evaluate all of your options when faced with accumulating payday loan debt. Whether you decide to explore payday loan forgiveness through a debt settlement company (or on your own), or if consolidation is better suited to your needs, make sure you find a reputable debt relief company to assist and guide you throughout the process.
BSI is a BBB rated company with an A+ rating. We are a non-profit payday relief and loan consolidation company with national reach. We invite you to check for availability in your state then contact us for a free evaluation of your current payday loan debts and explanation of how you may benefit from our consolidation program.