Overwhelmed by debt – watch out for payday loans in Florida

On behalf of Bankruptcy Law Firm of Clare Casas on Tuesday, April 15, 2014.

Consumers who find themselves in a position where a sudden crisis leaves them in dire need of money often turn to payday loans. Payday loans are seen by consumers overwhelmed by debt as a short-term relief to cover emergency expenses. Although the industry has its fair share of proponents – mostly people involved in the industry -- a number of studies have indicated that payday loans leave the lenders, in Florida and across the United States, in a worse position after the loan than before.

A consumer borrowing $300 halfway through a month are faced with a $345 shortfall in the next month's wages only two weeks later. Very often this leads to a cycle of ever-increasing debt from which the consumer struggles to escape. Many states have either banned payday loans or have instituted regulations to protect consumers from payday loans. Despite the attempts by government to restrain the industry, it remains a thriving industry using misleading information to entrap consumers.

Even though the proponents of payday lending use a number of arguments to illustrate the benefits, studies conducted do not concur with these views. One such study indicated that 90 percent of consumer households indicated that payday lending is a bad option to take. Further, 75 percent of consumers who have made use of payday loans indicated that they experienced the loans as harmful.

Consumers in Florida who feel overwhelmed by debt may want to explore the different options available under state law. When debt becomes overwhelming, a consumer may want to consider the protection of bankruptcy. Chapter 7 bankruptcy discharges unsecured debts and offers protection against creditor harassment, while Chapter 13 bankruptcy offers a reorganized payment plan for those who have a steady monthly income. Opting for one of these possible solutions may provide consumers with a chance to make a fresh start.

Source: consumerist.com, "Believe It Or Not, Outlawing Payday Loans Will Not Lead To Looting & Pillaging", Ashlee Kieler, April 6, 2014