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Payday loans are unsecured, short-term loans made at extremely high interest rates.  Payday lenders may be divided into two types – storefront lenders who typically take a check as security, and internet lenders who use the ACH system of electronic debits and credits.  More and more we see clients struggling to manage even 8, 10, even 20 payday loans.  Often the combined fees due each payday exceed the borrower’s entire salary. 

Payday loan settlement is where Langhorne Debt Solutions can offer unique, expert knowledge.  Payday loans are not one-size-fits-all.  There are many variations.  In settling these, Langhorne Debt Solutions pays close attention to each type of loan at issue and adjusts its strategy accordingly.

Direct Storefront Lending:

In this model, the lender is a local business licensed by its state to make loans directly to consumers.  It must follow local laws respecting the terms of these loans which may include limitations on rollovers, caps on interest, mandatory disclosures and automatic reporting to state databases.  These businesses usually benefit from a special usury law which exempts them from the general usury rate.  Usually, but not always, they will take a post-dated check from the borrower as security for the loan.

Internet Lending:

Most e-mail inboxes are filled each day with payday loan offers.  Most claim to have a veneer of legality – a license in their home state, authorization from an Indian Nation or an overseas location.  Some offer loans only to borrowers in states where they are licensed, while others claim that their state licenses allow them to lend to anyone, anywhere.  Still others have no license whatsoever.

Internet lenders tend to use Automated Clearing House credits and debits to fund and collect loans, rather than take personal checks.  Their contracts typically contain choice of law clauses that invoke less restrictive state laws and usually require arbitration of any disputes.

Bank Model Lending:

Until recently, many “lenders” were actually brokers for loans made by out-of-state banks.  Under federal law, a bank can “export” loans at interest rates that are legal in their home states, regardless of local laws.   Under what were often called “rent-a-charter” agreements, bank model servicing companies received the bulk of the fees.  They could be in either storefronts or on the internet.  Borrowers rarely knew anything about, let alone had direct dealings with, the actual lender. 

FDIC and OCC regulators have forced banks to leave the payday loan business, although some still dabble with “alternate products” such as short-term, high-interest installment loans.  Langhorne Debt Solutions will include some of these alternate products in a debt settlement plan.  Older loans that may still be active due to rollovers or which have defaulted and gone into collections may also be included.

Rebate Programs:

Not so much payday lending as a scam, these businesses work by selling a useless, low-value product at a very high price in installments.  But they give the customer an immediate rebate.   For example, a consumer might by a $5 phone card, get a $300 rebate immediately, and then pay $600 or more in payments over the next few months.

Even payday loan-friendly states take a dim view of this product.  But it remains popular, if not quite legal, especially in places where direct storefront lending is illegal.

Alternate Products:

To avoid the stigma of the term “payday loan” while still reaping the rewards some lenders, and even some banks, have begun offering lines of credit, personal loans and automobile title loans at high interest over short terms, i.e., 90 days.  On a case-by-case basis, Langhorne Debt Solutions will treat these products as “payday loans” for purposes of a debt settlement plan.

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This web site is for informational purposes only. It is not intended to provide legal advice or be a substitute for legal advice. We try to provide quality information,but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained on this web site or the results that you may achieve when you use our services. The debt settlement process should only be used in the event of legitimate financial hardship. If you have sufficient income to reduce your debt load the ordinary way (by reducing the balances with payments in excess of the minimums), then you should definitely do so.