If you are overwhelmed with a large amount of payday loan debt and are wondering whether you need a lawyer to help you, read on.
Should you hire a lawyer to help with payday loans?
Hiring an attorney will depend on the complexity of your circumstances, how much you owe, and if you are starting to get harassing calls from lenders. The more complicated the situation, the more likely you will need an attorney.
An attorney can stop those annoying collection calls
Debt collectors will be careful in reaching out to you when they know you have representation. The attorney knows all the state rules and how to play the game. Let the debt collectors know you have an attorney, and lenders should direct all communication to them.
A lawyer can help you understand legal procedures
Because they are specialists in your particular state, and each state has different payday loan laws, they can help you understand the process and simplify it for you. They also help you with your loan settlement process.
Legal counsel will negotiate on your behalf with the lenders
Not only will your attorney guide you throughout the process, but he will act as a mediator between you and the debt company. He will negotiate to reduce the amount of your debt obligation to a manageable payment based on your monthly income.
An attorney will help you avoid any possible legal action
If the lender decides to sue you, your attorney has the authority to speak with your lender to try to negotiate out of court. It is your attorney’s job to provide negotiation assistance.
A legal advocate will offer advice about whether the settlement process will help you
The advantage to using an attorney is that they will explore all the options with you. They can advise you if bankruptcy is the better option or if you should try to settle your debt.
An attorney is aware of the state laws
Each state has different payday loan laws. Your payday attorney specializes in your particular state. He knows how to navigate the laws and knows how to guide you accordingly.
Lawyers will be able to anticipate lender demands as well
Because you have done your due diligence to find a reputable attorney, they would’ve done hundreds of similar cases like yours and can easily anticipate the possible outcomes.
An attorney knows the statute of limitations on payday loans in your state
The statute of limitations will depend on the loan type and state it originated from. Since the clock starts when you miss a payment, you will want to give this information to your attorney.
Do payday loan attorneys charge fees?
Yes. Many offer a free consultation. You will want to speak to the attorney in person in their law office. It is safer than hiring someone over the internet or phone since some unscrupulous attorneys are a front for debt settlement companies that do not advocate for you. Another benefit of meeting face-to-face is assessing whether it will be a positive client-attorney relationship.
While on-site, it’s easier to discuss and assess the charges and affordability of their service. Before making an appointment, review the attorney’s experiences, reviews, and history to ensure they are a right fit for your case.
What’s a payday loan?
Payday loans are short-term loans with high interest rates. They help cover immediate cash needs until your next paycheck. Because of payday lenders’ predatory nature, sky-high interest rates (some over 600%) and additional fees, these loans are outlawed in some states, and repayment by the next payday is difficult for many borrowers. More than 90% of borrowers regret taking out a payday loan.
Here’s an example of a typical payday loan:
Cash advance apps
If you need some quick cash to carry you over until your next payday, these apps are a better alternative to payday loans. The fees are low and getting a loan is simple. Check out this guide to learn about some of our top picks.
What are some of the typical payday loan legal disputes?
Payday loans are relatively simple, but if you cannot repay the lender by your next paycheck, it can lead to more loans, penalty fees, and even a legal dispute. Some common legal conflicts include:
- Extremely high-interest rates
- Disputes over loan terms
- Breach of the lending contract
- Late payments
- Missed payments
- Disputes over service fees
- Loan fraud allegations against either lender or borrower
- Illegal use of loan documents that are commonly associated with identity theft
Still wondering whether you need a payday loan attorney? Additional questions to ask
Since many payday loan attorneys do a free consultation, start there. You can ask them if an attorney, debt settlement company or nonprofit credit counselor will be your best option.
Have your consumer rights been violated?
If you think the lender may have violated any lending laws, contact your attorney and check the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) sites for laws that protect you. Common violations include identity theft or misuse of personal information. You could have a case against them.
How much payday loan debt do you have?
If you’re struggling with repaying a payday loan or in a dispute with a creditor, it may be beneficial to hire a payday attorney. It would be best to do a cost-benefit analysis if the debt you owe is less than what you will be paying in attorney fees.
Did you receive a court summons?
If you did, do not ignore the debt collector. If they win through a default judgment, they can garnish your wages, take money out of your bank account and seize your personal property. An attorney can help you with the following steps, review your rights and advocate on your behalf in court.
Are you considering filing for bankruptcy?
If you are considering bankruptcy, it should be because you have tried everything else to get yourself on the right track financially and cannot pay your creditors back. Bankruptcy fees add up, so before you file, make sure that the cost of bankruptcy isn’t higher than the amount you owe.
Seek legal advice before you proceed. You will need a qualified bankruptcy lawyer to help you navigate through the legal process. Make sure you get along with the attorney you choose because the attorney-client relationship is important. Bankruptcy law is complicated. Do your due diligence to find a competent attorney who is knowledgeable about bankruptcy codes in your state.
Bankruptcy attorneys help clients reduce or eliminate debt or proceed with a bankruptcy filing through court proceedings. The bankruptcy process often involves complicated paperwork, hearings, and presenting arguments before a judge.
What’s the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?
Chapter 7 bankruptcy is the most common type of bankruptcy, also known as liquidation bankruptcy. It involves selling assets or property to pay off debt. Chapter 7 is a good choice if you don’t own a home and have limited income. This filing wipes our unsecured debt like credit card debt, medical bills, etc. It will cost around $1,500.
A Chapter 13 bankruptcy is a reorganization. Chapter 13 is for someone with a regular income and will repay their debt through an installment plan over the next three to five years. Costs to file Chapter 13 are a bit higher, ranging from $3,000 to $3,500.
Are you at risk of foreclosure?
You will most likely lose the home if you are behind on mortgage payments. A mortgage is a secured debt, so filing for Chapter 7 won’t wipe this out and doesn’t allow you to catch up on late payments, but it will temporarily halt foreclosure for a few months.
How to solve payday loan disputes
Just because you have defaulted on a payday loan, there’s no need to panic. There are specific steps you can take to resolve this dispute.
The simplest one is to pay back the loan. Paying the loan back ends the process and disputes immediately. It may be a cheaper alternative to hiring an attorney. Payment defaults can lead to liens on your bank account, personal property seizure, and wage garnishment until the debt is repaid.
Can a payday loan company sue you?
Yes, but only in civil court. You cannot go to jail for an unpaid payday loan.
Other options for debt relief
Here are some more affordable options before turning to a law firm.
Debt settlement company
Companies that will negotiate, settle or change the terms of settlement of the debtor. Debt settlement companies are for-profit companies, so do your due diligence to make sure they’re legitimate.
Debt consolidation is a process of combining debt into one streamlined monthly payoff. Debt settlement companies do debt consolidation and can be a risky option since it can severely damage your credit scores and take years to see any cost savings.
Debt consolidation loan
A debt consolidation loan is a personal loan used to pay off all high interest, unsecured debt, such as credit cards, medical bills, other personal loans, and making. The lender may not pay the loan directly to you but pay off your debts directly.
Debt management plan
It is not a loan. These companies are typically nonprofit and can cut your interest rate and pay off your debt faster for less. They help you strategize a plan to eliminate unsecured debt such as credit card bills, medical bills, and student loans.
These are organizations that advise you on your money and debt. They help you budget and manage your finances and offer money management workshops.
Read more: Credit Counseling: Your Definitive Guide
Take on a side gig
Drive for Uber, deliver with Postmates or Amazon, do babysitting or dog walking. Get on Fiverr or Upwork to parlay a particular skill set you may have, such as graphic design, writing, administrative duties, and the likes. The variety of jobs on these types of sites is endless.
Borrowing from friends and family
Borrowing from friends and family is the most accessible avenue to tap into. You will be surprised how your friends and family are, for the most part, happy to help. Most won’t make a big stink about lending $100. Get it from five different people if you have to.
Peer-to-peer lending is also known as “social” or “crowd” lending. It connects the individual investors directly with the people or businesses seeking loans. It’s an online match of P2P lending. Reddit also has the r/borrow subreddit, where you might be able to borrow money from fellow Redditors.
The bottom line
When you are drowning in debt, there are many avenues to explore in dealing with unpaid or past due payday loans. Depending on your situation, simple remedies will suffice. More complex cases will warrant expert legal advice. For the latter type of case, the advantage of hiring an attorney is that he can inform you of your rights, navigate the legal system, and can negotiate with the creditor on your behalf.
Look at the Google reviews and get a name through an attorney referral service. The bar association can refer you to a reputable attorney in this specialty area for a small fee.
There’s no substitute for meeting someone face to face in their office. Trust your gut, do your due diligence, look at the reviews and understand all the fees involved.
Attorney fees will all depend on the complexity of the circumstances of your case. They will charge you based on the scope of work, amount of debt owed, and difficulty of settlement.
Debt settlement can settle only unsecured loans such as credit card bills, medical bills and student loans. A mortgage is a secured loan and is not covered.