1. Consultation
You’ll receive a personal financial consultant after signing up for a payday loan consolidation program. The financial consultant collects vital financial information such as the payday loan’s interests, conditions of payments, client’s income, and monthly bills. He or she will also note whether you offered any collateral when taking the payday loan.
Reaching out to the lender
After the consultation stage, your debt consultation company introduces themselves to your payday loan lender. This means that they take over all debt-related communication between you and your payday loan lender. Your debt consolidation consultant will explain your financial hurdles to your payday loan lender and persuade them to waive off all penalties.
Implementing a monthly payment plan
After successful negotiations, your payday loan consultant will meet with you and create a monthly debt repayment plan. You’ll come up with monthly debt repayment installments based on your income, the number of pending payday loans, and lending interests. Adhering to this payday debt repayment plan will keep your lenders’ hands out of your bank account.
A payday loan lender may decide to revoke the newly negotiated debt repayment terms if their debtor defaults on the monthly installments.
Follow-ups
Your payday loan debt consultant will call you and request for regular appointments in order to keep track of your progress. Remember, your payday lender would have sued you, but instead, they offered you a second chance by agreeing to a payday loan consolidation program. The terms of a payday debt consolidation program are so friendly that your debt consolidation consultant trusts you to make the commitments without requiring supervision.
Paying your payday loan debt monthly installments on time improves your credit score gradually. After clearing your outstanding payday loan, you won’t have major challenges when applying for a new mortgage or loan.
Are there any requirements for signing up for a payday loan consolidation program?
Proof of monthly income
The aim of the debt consolidation program is to help clients clear off their outstanding payday debts. In order to meet your outstanding payday debt monthly installments, you need a source of income. During the consultation stage, your financial consultant will require you to produce recent paychecks from your current employer. If you recently switched to self-employment, you can provide recent audited financial statements to confirm proof of income.
A payday debt loan consolidation program can take 6-24 months. You’ll need to convince your debt consultant of your commitment by having a long-term source of income e.g. a permanent job.
An outstanding minimum debt balance of $10,000 dollars
A payday debt consolidation program works best for large outstanding debts. No lender will agree to waive off pending penalties owed by the defaulter if the pending debt is just a few thousands of dollars. When a lender agrees to your payday loan program, they still make significant profits from your monthly debt installment payments.
The debt consolidation company also earns a share from the monthly installments you pay. The higher the monthly debt repayment installment, the more the loan consolidation company makes.
Proof of residence or business premises
Payday debt consolidation consultants will visit your home or business premises when performing due diligence. It also helps them to locate you easily if you can’t make it to their offices due to an illness. If you’re about to relocate to a new city, you should inform your debt consultant before signing the payday loan consolidation forms.
If you belong to a residential committee, request a few members to meet your loan consolidation officer and vouch for you.
Collateral
Most payday loan consolidation programs require clients to provide collateral assets. Since the debt consolidation company is taking heat off your back, you’ll need to reciprocate by showing goodwill. Debt consolidation companies determine the minimum collateral value based on the outstanding payday loan amount, interest rates, and your credit score.
During the consultation, your financial consultant calculates your net worth by evaluating your house, business, monthly income, and any company shares. This enables them to decide which assets you may need to sell off in order to repay your outstanding payday loan.
6 reasons why debt consolidation companies discontinue payday loan consolidation programs
Intentionally providing false information
Providing false information to payday lending institutions when applying for credit can get you a long prison sentence. Debt consolidation companies enforce this law by requiring clients to sign a declaration of honesty on payday loan application forms. An offender also risks appearing on various credit reference institutions’ blacklists.
Some applicants try to get lesser debt monthly installment payments by understating their monthly income. It is wrong to conceal some of your personal assets from your loan consolidation officer.
Loss of income
One can lose their monthly payday due to retrenchment. A bad break in the economy may force you to shut down your business indefinitely. If the client had only one source of income, he or she will not be in a position to honor the remaining outstanding payday debt installments.
A payday loan consolidation officer evaluates what personal assets their client needs to sell. If the client’s assets are too little to offset the remaining balance, the lender gets out of the debt consolidation program.
Applying for a non-approved loan
A payday loan consolidation program prevents the defaulter from applying for other loans until payment completion. Attempting to apply for a different loan discreetly can worsen your credit rating because it’s a strong indicator of non-commitment to previous loan repayments. In addition, the guilty defaulter can get a prison sentence for misleading the new creditor by providing false credit history.
If you’re a payday loan defaulter whose feeling financially overwhelmed, you should get in touch with your debt consultant. They will enable you to pay lesser monthly installments by re-negotiating for an extended loan repayment period.
Refusing to honor monthly installments
It’s not unusual for some people to sign up for a payday loan consolidation program then disappear within a short time. Your payday loan financial consultant is entitled to request for your financial statement directly from the bank. This enables them to confirm whether your payday loan repayments are up to date.
Some payday debt consolidation companies nullify the payment agreement when a client doesn’t submit debt repayment installments for 3 consecutive months without offering any explanation.
Relocating without informing your debt consolidation officer
The physical address clients provide enable payday debt consolidation officers to locate them for consultations and payment follow-ups. It also provides some form of assurance of the defaulter’s commitment towards offsetting their pending payday loans.
High-risk defaulters usually flee to other states in order to avoid paying back outstanding loans. You can still relocate to greener pastures if you notify your debt consolidation officer in advance. Ensure you provide him with details on your new residence and employer or business premises.
Attempting to change your names through legal means
Why do lenders forbid defaulters from legally changing their names during the repayment period? Because it makes it quite hard for them to track down the defaulters in case one relocates to a different state. A payday loan defaulter who’s successfully changed their government names can easily relocate to a new city, open a new bank account, and renege on the payday consolidation agreement.
