Even during trying moments, most of us hold onto the dreams and plans we have for living a more comfortable financial life. For too many Americans, however, that hope is growing dimmer. Today, more and more of us are living "paycheck to paycheck". This means that they rely on each and every paycheck to cover current bills and expenses, so that any extra expenses or a decrease of income can be disastrous. In 2009, 61% of workers nationwide reported that they were living paycheck to paycheck. This number increased considerably from 2008 when 49% of workers reported a similar financial state. And this is not simply a problem among those of low income, as approximately 30% of workers earning over $100,000 reported a dependency on each paycheck to meet expenses.
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Sadly, one type of company is profiting on these types of financial troubles. When faced with a lack of money until the next paycheck, fear can set in. As a result, many individuals turn in desperation to companies which offer a type of loan referred to as "pay day loans". These loans are considered short-term loans meant to cover an individual's money gap until their next paycheck. However, in reality, the loans incredibly high interest rates and fees often simply end up pushing those already in a precarious situation into a deep hole of debt.
While each state has different laws regarding a lender's ability to charge fees and interest rates, only a handful restrict or adequately regulate payday loan lenders. For instance, though Texas has usury laws limiting excessive interest rates, it allows these companies to get around these laws by operating as credit service organizations that coordinate loans between borrowers and out-of-state lenders. Borrowers are then charged extremely high fees and outrageous interest rates, with APR's on loans reaching as high as 500%. Even when regulations do exist, however, reports are rampant of payday loan companies openly violating laws on interest rates and rollover limits, and committing other fraudulent activities. They are also notorious for aggressively pursuing debt, despite knowingly targeting lower income communities and at-risk individuals. As a result, an individual who uses payday loans often finds that any relief is short-lived, as they have traded one debt for another rapidly uncontrollable one.
When an individual or family is living paycheck to paycheck, the unexpected can be disastrous. Many must face additional debt, late payments and fees, damaged credit, and potentially the loss of assets. Even worse, some are forced to do without essential needs such as food, shelter or medical care. While pay day loans may feel like your only option, they too often are a very temporary fix that ultimately makes a bad situation worse. Individuals who are unable to pay their bills may find that a better solution may be to file bankruptcy. While a payday loan will simply add to your debt, bankruptcy can allow you to possibly dissolve or renegotiate your debt in a more manageable fashion. Even payday loans may be resolved in bankruptcy, ending collection harassment by them and other creditors. If your debts have become unmanageable or you are being pursued for debt owed to a payday loan company, contact a San Antonio bankruptcy lawyer who may be able to help.
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