Debt Collection Settlement with Payday Loan Lenders

While today’s economy may be looking up for some of us, the fact is there are still millions of Americans struggling with debt. Payday loan lenders, as well as across the US, have seen a huge increase in the number of people turning to short-term cash loans to meet emergency financial needs as well as their monthly budget. When faced with the inability to make payments to creditors, we explore all of our options in an effort to pay off our debts and avoid loan defaults. That may include taking out a quick cash payday loan to get you through the month. But what if you find yourself in the position where you can’t pay your payday loan lender?

Debt collection settlement has become a way for consumers to find that “happy middle ground” with their creditors while staying out of their finances. Whether it’s a credit card that’s slipped too far or a cell phone that’s gone haywire, chances are you’ll offer some form of retribution for what you owe through debt settlement. But what about the debt you owe on a payday loan? If you’ve reached the end of the road and no longer know what to do with those endless phone calls and collection letters, it’s time to act.

The first thing you need to know about debt collection settlement with a payday loan lender or any other creditor is that it is a last resort. If you have already tried to make payments to your lender and continue to default, it is likely that your account has gone to collections. Many lenders use “in-house” collections, while some will sell delinquent loans to an outside collector. The first thing you’ll need to figure out is who you’re trying to settle with: the lender that originally made the loan or a third-party collector. It is always important to know your rights as a consumer when it comes to collecting a debt. While there are many honest and forthright debt collectors out there, it’s wise to know where you stand in this type of situation.

Once you’ve determined that you’re dealing directly with your payday loan lender, check their quote before you call to determine how much money you can offer in the settlement. Be realistic and don’t offer more than you can really afford. Start by offering less so you have room to negotiate, and never give a third-party collector your bank account or employer information.

While most payday lenders don’t report negatively to the three major credit bureaus, it’s still a good idea to ask your lender if they’ve reported anything on your credit report. While any type of negative information reported prior to the settlement cannot be removed, you can still work to increase your score once all is said and done. If you are dealing with a collector, ask them to remove any negative information reported since taking over the debt from the lender. Be sure to check your credit report to make sure negative information has been removed.

Finally, don’t give money to the lender or collector until you have a written settlement agreement. If you wish, you may consult with a consumer law attorney to review the agreement. Once you have it in writing, have read it before you sign it, and have made a copy for your records, you can pay off your debt and move on. If the lender or collector refuses to give you a written agreement, make a copy yourself and send it by certified mail, return receipt requested. Make sure you honor the agreement, as this may be your last option to take care of that debt once and for all!