Debt Consolidation Loans Can Make Your Predatory Loan Debt Disappear
When you are living paycheck to paycheck and struggling to keep up with the monthly minimum payments on your debts, it is easy not to think too much about the details. If you have to pay $200 per month to keep from falling behind on payments on a debt, then you simply pay the $200. If the outstanding principal balance on each monthly statement is lower than it was the previous month, this is encouraging, but sometimes the principal balance stubbornly refuses to budge, so that you are putting a substantial portion of your income toward debt payment but just treading water instead of making progress on paying down your debt. This is how lenders want it, and thanks to plenty of legal loopholes, plenty of predatory lending schemes can operate legally, potentially keeping consumers in debt for life. Depending on the terms of your loan, a $200 monthly payment could make a dent in your principal balance to the tune of $50 or more, enabling you to pay off a $2,000 loan in less than four years, or it could go to interest only, meaning that, unless you pay more than the minimum payment, you stay in debt forever. The latter kind is known as predatory loans, and in some cases, taking out a lower interest loan is a good way to make predatory loans go away. A Plantation debt consolidation lawyer can help you decide whether debt consolidation is appropriate for your situation.
The Honest TitleMax Managers: A Cautionary Tale
You know that a loan is predatory when the company selling it to you discourages its employees from telling consumers the truth about it. TitleMax advertises its auto title loans as having interest rates comparable to a credit card, but that is only for the first month. The interest rates quickly increase until they reach the payday loan range. Cordelius Brown and Ted Welsh Lupica, former managers of a TitleMax in Georgia, were tired of seeing their customers struggle financially, so they decided to tell them the truth. They printed out the terms of the loans and gave them to customers, instead of following the company’s policy of just showing the customers the terms on a computer screen. Brown even advised several customers to take out debt consolidation loans that, for the same monthly payments as the auto title loans, they could pay off much more quickly. Both managers faced retaliation from their employer.
Is Debt Consolidation the Best Solution?
Debt consolidation is much better than predatory lending, but it is not a freebie. If you know that you will struggle to keep up with payments on a debt consolidation loan, it may be a better idea to file for chapter 7 or chapter 13 bankruptcy protection.
Work With a Debt Lawyer to Consolidate Your Debt
A South Florida debt lawyer can help you pay down your high-interest loans by taking out a loan with a lower interest rate. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.