When something seems too good to be true, it almost always is. And quick fixes are never what they seem.

I’m talking about payday loans. As a Memphis bankruptcy lawyer, I watch payday loans trap plenty of hard-working people in a long-term cycle of debt. Lenders prey upon vulnerable people who are struggling to make ends meet, marketing their products as a one-time fix. But they know fully well that a payday loan is the beginning of many financial woes. It’s the problem, not the solution.

What is a payday loan?

It’s simple enough in theory: you take out a small amount of money at a high interest rate, to be repaid when you get your next paycheck. So if you need to borrow $100 until your next payday, you’ll write a postdated check — to be automatically cashed on payday unless you extend the loan — for $100 plus the fee.

Extending the loan is exactly what these lenders want you to do. It will cost another fee in addition to the original one. Their business model depends on the fact that borrowers cannot pay off the loan without taking out another one. Lenders make over 70% percent of their money from borrowers who’ve taken out more than 10 loans in any given year. I’ve been a Memphis bankruptcy lawyer for more than three decades. I’ve met so many people who never break the cycle.

According to a campaign called Stop the Debt Trap, “The average borrower takes out 10 loans and pays 391% in interest and fees. 75% of the payday industry’s revenues are generated by these repeat borrowers. The debt trap is, in fact, the payday lending business model.”

Caught in the cycle of payday loans? Consider bankruptcy.

There is not an easy fix for debt. If you feel pressured to take out payday loans, there’s a good chance you are living above your means.

Unlike the inescapable cycle of high-interest loans, bankruptcy can actually bring lasting financial freedom. Whether you want to get rid of dischargeable debt, like credit card and medical debt, in a Chapter 7, or consolidate your mortgage and car payments into an affordable amount in a Chapter 13, I can help.

Want permanent control over your finances? If you’re looking to solve your financial problems sustainably, I’d love to discuss your options with you. Contact us here or call (901) 327-2100 to speak with an experienced Memphis bankruptcy lawyer today.