Tennessee payday loans make bad financial situations worse

Payday loans may seem like an attractive option, but they come with many risks and complications.

Have you fallen behind on bills? Are you facing the shut-off of a utility service, an unexpected medical expense or a sudden auto/appliance repair? Are you dealing with creditor harassment? Do you lack the savings necessary to cover these costs? Are traditional options like bank loans unavailable to you due to a poor credit history or low income?

If you answered "yes" to any of these questions, you may be considering seeking out a payday loan (sometimes called a "payday advance"). Because of the insanely high interest rates and fees - some of them carry an annual percentage rate of 25-50 times more than the average credit card -you should think long and hard prior to taking this drastic step.

The problem with these types of loans, aside from the astronomical interest rates, is that most people cannot afford to pay them off in full at the end of the loan period (usually no more than a month). They then have to "roll over" the loan, for a steep fee. This can snowball, resulting in a loan amount of thousands of dollars and high-interest payments for years to come on what should have been a one-time repayment of just a few hundred.

Consider short-term alternatives

Before taking out a payday loan and trapping yourself in a vicious cycle of debt, strongly consider any short-term alternatives at your disposal. Do you have a friend or family member who could lend you the money you need? Could you or your spouse ask the boss for an advance on your next paycheck? Do you have a credit card on which you could charge the expense? A credit card will have a much lower interest rate than a payday loan, even if you can't pay off the balance at the end of the month as recommended, so think about that also. The well-respected financial site NerdWallet even recommends that its visitors consider the seemingly drastic steps of visiting a pawn shop or selling personal items online before taking on a payday loan.

Thinking about the future

If you struggle to make ends meet, are dealing with harassment from creditors and bill collectors, or are facing the possibility of foreclosure, eviction or repossession, you aren't alone. You don't have to continue to struggle alone, though; there is help available. It's possible that debt negotiation or management might significantly improve your financial situation. Of course, debt renegotiation isn't always the best approach. In some cases, a bankruptcy filing might be a better way to eliminate unsecured debt, lower monthly payments, save your home and get the fresh financial start you need.

To learn more about Chapter 7, Chapter 13 and other debt relief options, contact an experienced bankruptcy attorney like those at the Nashville and Cookeville, Tennessee, law offices of Lefkovitz and Lefkovitz today.