Up to 80% of Americans say they live paycheck to paycheck. Many are unprepared for unexpected $400 expenses. In the midst of the coronavirus pandemic, more people than ever before are working fewer hours or losing their jobs completely. We should anticipate that more people will consider new ways to make ends meet, including payday loans.
As a Memphis bankruptcy lawyer, I am asking you to think long and hard before resorting to these forms of short-term relief. I know these are trying times, but nothing is worth spiraling further into a nearly impossible-to-break cycle of debt.
Often, payday loans entice people who do not qualify for traditional loans. It’s a cruel irony that vulnerable people, who are the least equipped to deal with the high interest rates and fees associated with these loans, are the ones who come to rely upon them.
Payday loans seem appealing in theory. They sound simple enough. However, they frequently become a giant debt trap. Borrowers take out a small amount of money at a high interest rate, with the intention of repaying it on their next payday. But many of them can’t, so they extend the loan. That’s exactly what these lenders want you to do. Every time you extend the loan, the amount you owe increases. New fees and interest add up. I’ve met so many people who were unable to break the cycle.
Millions of Americans pay millions in payday loan fees. The Pew Charitable Trusts reports that 12 million payday loan borrowers pay roughly $9 billion in related fees annually. Payday loans come with interest rates of 300 to 500%, often hidden as other fees. According to the Consumer Financial Protection Bureau, the national average APR for these loans is nearly 400%. That’s higher than even the most high-interest credit cards.
A Memphis bankruptcy lawyer can walk you through your options
Nobody wants to resort to a payday loan, and we are living through an unprecedented crisis. But that’s precisely why I encourage you to explore other options. If you are already in a vulnerable position, a payday loan will only exacerbate your problems.
If you feel pressured to take out payday loans, you are likely dealing with significant debt. It is not going to go away on its own. For all the ways in which the coronavirus pandemic has been terrifying, it also presents us with a tremendous opportunity for a reset. This is a great time to explore bankruptcy, and come out of this even stronger.
In contrast to the debt trap of high-interest loans, bankruptcy can bring long-term relief. If you seek permanent control of your finances, I’m a Memphis bankruptcy lawyer who can help.
Call (901) 327-2100 to explore your options with a trusted Memphis bankruptcy lawyer today.