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Reasons Lenders Work With Payday Loan Consolidation Companies

If you’re one of the millions of Americans drowning in payday loan debt, you’ve probably already considered seeking help from a consolidation company. You’ve done all the work you had to do to beat your payday lenders: you’ve searched online for a good, reliable company, you’ve filled out all the paperwork, and you’re finally ready to take back control of your finances. Then suddenly your lenders tell you something that stops you in your tracks. A simple statement that can make anyone with debt feel completely hopeless: “We DO NOT work with consolidation companies.”

Is this true? If payday lenders don’t work with consolidation companies, why do they exist? These are the top three reasons your lenders will eventually work with your consolidation company.

1. Before you sign up for a debt relief program, the first thing payday loan consolidation companies will recommend is to close the bank account that your lenders have access to. Although consolidation companies send legal documents to your payday lenders to revoke your authorization to automatically debit your bank account, it is necessary that you close your bank account to make sure there are no unauthorized charges coming out of your account.

2. Your payday loan consolidation company will also send legal documents to your payday lenders to cease and desist any further communication with you. According to the Federal Trade Commission, lenders must follow certain rules and regulations when collecting debts. If your payday lenders don’t follow these rules and continue to make harassing phone calls, your lenders can be fined $1,000 for EACH phone call they make. Since most loans are for small amounts ($200-$1,000), calling it in becomes a risk that simply isn’t worth taking.

3. Many are afraid of being sued if they don’t repay their payday loans. Most borrowers don’t know that most payday lenders (especially internet-based ones) are not licensed to lend money to people residing in the United States. This means that payday lenders do not have the ability to take non-paying customers to small claims court for a payday loan. Payday lenders often use this tactic to scare borrowers into paying them, and it’s effective because most customers aren’t well-informed about what lenders can and can’t do.

Now sit back and think about this for a moment: Your payday lenders can’t debit your bank account for payment, they can’t call you for money, and they can’t sue you for the unpaid loan. How else will they be paid? Who else can they turn to? There is only one answer: payday loan consolidation companies.

So why would your payday lenders refuse to work with consolidation companies in the first place? It’s simple. People who sign up with consolidation companies obviously have multiple payday loans. In fact, people who drown in payday loans typically have between two and twenty payday loans. Consolidation companies typically work from lender to lender, which means if you’re a payday lender, you won’t be sure when you’ll get paid. Payday lenders are aware of this and know that they are likely to get paid faster if there is no third party involved. For this reason, they state that they do not work with payday loan consolidation companies, although they eventually will.

Don’t let your payday lenders intimidate you until you have all the facts. If you’ve tried everything you can to get out of payday loan debt but failed, it may be time to seek professional help. After all, who wouldn’t benefit from a little help from time to time?

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