Payday and car title loans can create overwhelming debt
As the economy continues to struggle, many Georgians find themselves struggling with debt. Whether from an unexpected medical condition, decreased wages, unemployment, or high debt burden, individuals may find it difficult to make their minimum payments on time. This overwhelming debt may force individuals to look elsewhere for funds, which could cause them more financial troubles.
Two popular options for people struggling with debt are payday loans and car title loans. A payday loan often requires a borrower to post-date a check and then pay fees and interest on a loan. The interest rates are usually quite high and it is often difficult for the borrower to pay off the entire balance when due. When this happens, the borrower usually rolls the loan over, creating more fees and interest to accrue. These types of loans often create a debt spiral that is difficult to get out of.
Car title loans can also be dangerous for borrowers. Under these agreements, borrowers use the title to a vehicle that they own as collateral for a short-term loan. These loans, which typically have a term of 30 days, can carry triple-digit interest rates, making it difficult to pay the full amount when due. However, a late or missed payment can result in a borrower’s car being repossessed. Losing one’s car can make it difficult to get to work, making the financial struggle that much more difficult.
Those who find themselves trapped in a cycle of debt can find debt relief. Speaking with a legal professional may be the smartest way to discover available options, but for many, bankruptcy may be the best strategy. Bankruptcy often carries a negative connotation, but it can provide debtors with the fresh financial start they deserve. Chapter 7 bankruptcy, in particular, may allow debtors to liquidate their assets and eliminate debt. They may even be able to keep certain property that is exempt from bankruptcy proceedings. In the end, debtors should take comfort in knowing that options exist, and should not be afraid to discuss those options with a trustworthy legal advocate who will protect their rights.
Source: U.S. News & World Report, “The Truth About Payday, Pawnshop and Car Title Loans” Jenna Lee, May 22, 2014