Reasons Lenders Work With Payday Loan Consolidation Companies

If you’re one of the millions of Americans drowning in payday loan debt, chances are you’ve already considered seeking help from a consolidation company. You’ve done all the work you needed to do to outsmart your payday lenders: you’ve searched online for a good, trustworthy company, filled out all the paperwork, and finally, you’re ready to take back control of your finances. Then all of a sudden your lenders say something to you that stops you in your tracks. A simple statement that can make anyone with debt feel completely hopeless: “We do NOT work with consolidation companies.”

Is this true? If payday lenders don’t work with consolidation companies, why do they exist? These are the top three reasons why your lenders will eventually work with your consolidation company.

1. Before you enroll in a debt relief program, the first thing payday loan consolidation companies will recommend is to close the bank account that your lenders have access to. Although consolidation companies send legal documents to your payday lenders to revoke your authorization to automatically debit your bank account, it is necessary that you close your bank account to ensure that no unauthorized charges are coming out of your account.

2. Your payday loan consolidation company will also send legal documents to your payday lenders to cease and desist from any further communication with you. According to the Federal Trade Commission, lenders must follow certain rules and regulations when collecting debts. If your payday lenders don’t follow these rules and continue to make harassing phone calls, your lenders can be fined $1,000 for EVERY phone call they make. Since most loans are small amounts (between $200 and $1,000), calling you becomes a risk that is simply not worth taking.

3. Many are afraid of being sued if they don’t pay their payday loans. Most borrowers don’t know that most payday lenders (especially internet-based ones) are not licensed to lend money to people residing in the United States. This means that payday lenders do not have the ability to take non-paying customers to small claims court for a payday loan. Payday lenders often use this tactic to scare borrowers into paying them back, and it’s effective because most customers aren’t well-informed about what lenders can and can’t do.

Now, sit back and think about this for a moment: Your payday lenders can’t debit your bank account for the payment, they can’t call you for money, and they can’t sue you for the unpaid loan. How else will they be paid? Who else can they turn to? There is only one answer: payday loan consolidation companies.

So why would your payday lenders refuse to work with consolidation companies in the first place? It’s simple. People who sign up with consolidation companies obviously have multiple payday loans. In fact, people drowning in payday loans typically have anywhere from two to twenty payday loans. Consolidation companies typically work from one lender to another, which means that if you are a payday lender, you won’t be sure when you’ll get paid. Payday lenders are aware of this and know that they are likely to get paid faster if there is no third party involved. For this reason, they claim that they do not work with payday loan consolidation companies, although they eventually will.

Don’t let your payday lenders intimidate you until you know all the facts. If you’ve tried everything you can to get out of payday loan debt but have failed, it may be time to seek professional help. After all, who wouldn’t use a little help from time to time?