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Bankruptcy May Be Your Option

Bankruptcy may be better choice in the long run than payday loans

If you watch television any time of day in Oklahoma or anywhere else in the country, you have probably seen the ads. “Get money now.” “No collateral necessary.” “Pay medical expenses, buy gifts for the holidays, or take a vacation.”

Whether you have short-term financial challenges or just have the need to escape for a few days, payday loans are available to almost anyone for almost any reason. But before opting for the quick money, consider the long-term consequences of what is marketed as a short-term solution.

The Consumer Financial Protection Bureau recently released the results of a study that produced an alarming statistic. Instead of being a short-term solution, the study showed that the majority of these loans are extended or rolled over several times. The longer the original loan is open, or when it is rolled over into another loan, interest rates and other fees increase.

The statistics show that within two weeks of the first loan, 80 percent of payday loan borrowers roll over the loan or take out another loan. Of those, 62 percent of borrowers extend the loans to the point that they pay more fees to the payday lender than the amount of the original loan. Only 15 percent repay their loan on time. And, each time a loan is rolled over or a new loan is created, the already high interest rates are increased with additional fees.

If you find yourself in a position to think about a payday loan as an option, chances are that you have more than one debt that is putting you in that situation.Speaking with an Oklahoma bankruptcy attorney could help you alleviate some of your concerns and understand your rights to various debt relief options.

Source: USA Today, “Watchdog warns: Payday loan fees trap borrowers,” Nanci Hellmich, March 25, 2014

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