How do I get out of payday loan debt? Find out in 5 steps

posted by in Payday Loans

UPDATE: 1 July 2014 – new rules from the Financial Conduct Authority (FCA) means that payday loan companies:

  • cannot rollover an outstanding payday loan balance more than twice
  • must send the debtor an information sheet with contact details for various debt advice organisations. A copy of this information sheet can be seen here
  • cannot make more than two attempts to deduct money from a debtor’s bank account by means of Continuous Payment Authority (CPA) unless a rollover has been agreed.
  • Must now include a prominent risk warning on all financial promotions.
Payday loans neon sign

We can help you deal with payday loans

When people ask themselves “how do I get out of payday loans?” they’ll often think the answer is to pay one loan off with another. It’s not. This is an all too common problem that we see.

We know being in payday loan debt can be scary. If the repayment date looms and you can’t afford to repay, we can help. Follow these five steps to help deal with payday loans you cannot afford to pay.

Step 1: Don’t panic!

Payday loans are often advertised as a way of funding an unexpected ‘one-off expense’, like a car MOT. But the reality is four in ten people take them to pay for essentials like food and petrol – putting food on the table and getting to work.

A quarter of people take a payday loan to repay other credit. If you’re struggling with payday loan debt – don’t panic! You’re not alone. We can help you get out of debt without taking any more loans.

Step 2: Stop the borrowing cycle

The trap many people fall into is not being able to afford it in the first place, but feeling there’s no way out other than to take out another one…and another then another.

You need to stop the cycle! Constantly taking out loan after loan may seem like a fix to your problems – it’s not. By drawing a line under taking more loans you’ll stop slipping deeper into debt. You can deal with the debt that’s left by following the next steps…

Step 3: Cancel the CPA payday loan payment      

A payday loan is a non-priority debt. That means it should only be paid from money you’ve got spare once you’ve paid priorities like rent, mortgage, household bills, food and living costs. If paying back the payday loan means you’ll be short of money to pay priorities you should stop the money being taken.

When you applied for the loan you gave your card details to set up a continuous payment authority (CPA). This is how most payday loan company take the repayment.

However it’s a direct link to your bank and the payday lender can take the money whenever they want. If there’s not enough money to cover the full repayment they can try again and again.

If the money isn’t in your account you might get bank charges. So if you can’t afford it you should cancel the CPA. It’s easy to do:

  • If it’s the day the payment is due ring the bank asking them to cancel the payday loan payment
  • If it’s 1-5 days away email this template letter to the bank
  • If it’s more than 5 days away send the template letter to the bank by post
  • To keep them in the loop you should send a copy of the template letter to the payday loan company too. Do this after the bank has cancelled the CPA

Still unsure what to do? Read our article how to cancel a CPA on a payday loan. But come back here! There are still more steps to getting out of payday loans debt.

Step 4: Repay only what you can afford

One of the gripes people have over how payday lenders work is over their collection process. The truth is you cannot be made to repay more than you can afford. We can tell you how much that is and crucially we can help you prove that to the payday lender.

The easiest way to do that is to use our Debt Remedy tool.

What is Debt Remedy?

It’s our way of giving free debt advice online, to anyone who needs it. It’s a money management and debt solution tool that works out your options based on your budget. It’s quick, easy to use and you don’t have to give your name.

How do I use it?

  • You put in your income and outgoings
  • It then budgets payments like rent and bills (including arrears) to make sure the most important people and companies are being paid
  • Then it gives you a personal action plan to deal with all your debts including the next steps you need to take

Can I speak to someone?

Sure. If you’d prefer you’re welcome to ring and speak to one of our debt advisors.

Step 5: Live a life without payday loans

You’ve stopped the cycle of borrowing and retaken control. With our expert debt advice and budgeting help via Debt Remedy or on the phone you can manage your outgoings within your income, without the need to take more credit.

We can help you budget for priorities, clear any arrears, budget for future payments and then provide one of a range of debt solutions to manage your debt over the longer-term.

Remember…

Very often people take payday loans because they’re desperate, but there’s a way out. By following the steps above and getting expert debt help from us you can live a life free from payday loan debt.

Tags Payday Loans
  • Austin Best

    Hello friends My name is Mr Austin Best, actually i will like to really take out time to comment about a testimony that took place in my life on how God directed me to a genuine loan lender who have transformed my life from grass to grace, from being poor to a rich man who can now boast of a healthy and wealthy life without stress or any financial difficulties. After so many months of trying to get a loan on the internet and was scammed the sum of about $12,000.00. I became so desperate in getting a loan from a legit loan lender online who will not add to my pains,then i decided to contact a friend of mine who recently got a loan online, we discussed about the issue, and to our conclusion he told me about a man called Mr Mark Wilson. Who is the CEO of Leed Way Loan Firm, So i applied for a loan sum of ($170,000.00) with low interest rate of 2%. Then the loan was approved easily without stress and all the preparations where made concerning the loan transfer and in less than fortyeight(48) HOURS the loan was deposited into my bank account, i thought it was a joke until i received a call from my bank that my account have been credited with $170,000.00. I became so happy that finally God has answered my prayers by directing me to a genuine loan lender who was able to grant my heart desires. A very big thanks to Mr, Mark Wilson for making life reasonable for me. I am advising anybody who is interested in getting a loan, to kindly contact him via email (Leedwayloanfirm@yahoo.com), that was how i got my loan and i was able to pay off my bills.Thanks as you took out time to read about my success story and i pray God will also do his will in your life.

  • becky mogan

    My name is becky mogan, i am from New York USA, I’m married, i have been searching for a genuine loan company for the past 5 months and all i got was bunch of scams who made me to trust them and at the end of the day, they took my money without giving anything in return, all my hope was lost, i got confused and frustrated,i find it very difficult to feed my family, i never wanted to have anything to do with loan companies on the internet, so i went to borrow some money from a friend, i told her all that happened and she said she can help me, that she knows a loan company that can help me with any amount of loan needed by me with a very low interest rate of 2%, that she just got a loan from them, she directed me on how to apply for the loan, i did just as she told me, i applied with them onEmail:(simonscottloanoffer12@gmail.com), i never believed but i tried and to my greatest surprise i got the loan within 24 hours, i could not believe,i am happy and rich again and i am thanking God that such loan companies like this still exist upon this scams all over the places,please i advise everyone out there who are in need of loan to go for(simonscottloanoffer12@gmail.com) they will never fail you,and your life shall change as mine did.

  • MILLER_20

    Are you looking for a loan urgently? Have you been denied loan from Bank?
    Or do you need a loan to pay off bills? or start your own business?
    worry no more Mr Brown Davids is a GOD fearing loan lender who offers loan at low interest rate of 3%.
    serious need of loan to contact this GOD fearing man via: browndavidsloans@gmail.com