Frequently Asked Questions regarding the Consolidating of Payday Loans
- Is This a Loan?
No, Debt Management Programs are repayment plans for existing loans. You make one payment a month to BSI, and we in turn distribute the pre-arranged amounts to each lenders til the accounts are paid in full.
- Can I Cancel Before my Debts are Satisfied?
All programs are voluntary and you may cancel anytime. Be aware, lenders will revert to the original terms of the loan if you leave a DMP early
- What Happens When I consolidate Payday Loans through a Debt Management Agency?
Lenders will adjust the terms to accommodate just a single monthly payment needed of about 10% of the outstanding balance. This is usually far less then the combined bi-weekly payments most payday loan lenders have set for you in the original terms you signed. Almost all payday loan lenders stop assessing interest once our Client is enrolled in a Program. For those that already had calculate interest up-front into the terms, they will generally waive a good portion of the pre-agreed finance charges.
- How does this affect My Credit?
Most Payday Loan Consolidation Programs are not reported to the credit reporting bureaus, however, some lenders do report payment history and clients should make their payments timely as agreed. A DMP can in some cases, have a negative affect on higher scores. Big Solutions is not a credit repair or restoration company and we have no control, nor make any representations regarding the way your lenders report your account history. You should discuss this with our counselors regarding your decision to enroll in a DMP if you plan to make any major purchases or have high credit scores. It should be noted that being on a Debt management program will not change your FICO score.
- Why shouldn’t I just file for Bankruptcy?
For cases of crushing very high debt, bankruptcy may be a viable option. When considering this option for payday loan relief though, you have to evaluate your total balance in comparison. Most payday loan consolidation programs are dealing with around an average of $2500 total debt. To file for bankruptcy, retaining an attorney to do the filing could cost at least that much. Why have a bankruptcy on your credit report for 10 years when you could have just paid back the loans for the same costs?
- Why shouldn’t I just use a Debt Settlement Company to cut my balances down?
The way Settlement companies work is they take monthly payments from you and hold them til they build up enough funds to settle with your lender for less than owed. The problem with this option for Payday Loan relief, is generally the amount reduced off the balance is forgiven from the interest piled on at inception. Since this amount is generally adjusted for Debt Management Plans as well, DMP clients still enjoy the interest savings but are making timely monthly payments to the lenders and considered current on the loans. Holding payments back for months while building up funds to settle means lenders are not being paid in the interim. Since there is not an agreement in place with the lenders during the process, expect constant collection calls, more severe credit reporting entries, and the very real possibility they will sue you first.
Big Solutions, Inc. partners closely with families and individuals to help resolve stressful money management issues and set realistic, attainable financial goals. Our certified, professional counselors will always work diligently to provide you with the most appropriate debt management solutions, based on your unique personal and financial circumstances, and clearly explain the advantages and disadvantages of all available options.
Please be assured that information obtained in counseling sessions is considered extremely confidential. It is used solely to determine and develop the best and most realistic course of remedial action. Big Solutions strongly adheres to parameters set forth by the Gramm-Leach Bliley legislation.
The purpose of these sessions is to provide constructive advice, continued support and personalized assistance so that you can successfully meet your current and future objectives.