Mike and Pam are just a regular couple living in Minnesota and enjoying the American dream today, but not long ago they wrote their own chapter in the book of payday loan debt stories, and it was a crazy story!
Sadly their story is not unique and although a bit extreme these extreme stories are becoming the norm simply because people are not informed when it comes to these types of loans and the traps they can set.
It all started with one simple $500.00 two week payday loan that turned into a two and a half year nightmare!
Let’s take a look at their story and see what happened!
Mike And Pams Story
Pam woke up one morning in the middle of winter and went out like she always did to start the car and let it warm up before she ran her two kids to school and went to work herself at the local Wal Mart.
When she turned the key to start the car nothing happened!
She called her local repair shop and had the car towed into their shop while making arrangements for getting the kids to school and herself to work.
To keep the story flowing it ended up being a bad starter on the car and a repair bill of just under 500 bucks.
Mike and Pam had no savings and their credit was not in good standings and they needed that car back as soon as possible so they chose to get a 2 week $500.00 payday loan to pay for the repairs and towing.
The $500.00 loan would cost them $150.00 in interest to borrow the money for two weeks, but hey, they needed the car and they could get the money the same day and thus their car problem would be solved.
This happens about every minute in the United States.
If the story ended with the person or persons involved just paying the loan totaling $650.00 ($500.00 for the loan and $150.00 for the two weeks of interest) off in full 0n the date the loan was due there would be no more story.
It rarely ends this way though, and this was just the beginning of the story for Mike and Pam!
One Loan Then two …….
The car worked perfectly and both Mike an Pam thought they had been lucky to be able to borrow the money they needed so quickly!
Yes, it was costing them $150.00 to borrow that $500.00 for two weeks but they needed the car back right away so they were OK with the terms.
Two days before the loan was due, you guessed it, the car broke down again, this time it was the timing belt, and the quick fix for this was about $1500.00
Mike and Pam could not believe their luck, not only was the first loan due in two days, now they needed another $750.00 to bail the car out again!
Tom did some research and found out he could extend the first loan by just paying the $150.00 interest charge, and that he would be able to take out a second payday loan for $1000.00 and kick in the difference from the saved money on the first loans roll over to bail the car out.
While Tom did get the car back from the second repair, he has now spent $150.00 to borrow $500.00
The outstanding balance of the rolled over loan at the original total of $650.00 (When you roll over a loan you pay the interest and they extend the original loan for two weeks and re-add the interest, thus the total is the same as the original loan) is due in two weeks.
The new loans balance $1000.00 for the loan and $500.00 to borrow it for two weeks) is $1500.00 and it too is due in two weeks.
Add the two together and the total is $2150.00!
Can you see where this is headed?
Out Of Control Debt Cycle
Tom and Pam simply did not make enough money to pay these two loans off in two weeks and thus starts the rollover game, and finally, they default on both of these loans.
Statistic say the average couple rolls over their loans about 4 times before they either pay them off or default on the loans and that is exactly how many times Mike and Pam rolled these two loans over, and then they defaulted on them, but not after paying out several thousand dollars in interest.
This story played out with a happy ending because mike and Pam contacted us to resolve their payday loan debt problem and we made them smile again but before they found out we could help them they went through all the horrors of out of control payday loan debt.
They had defaulted and destroyed their bank account because these loans were set up as automatic withdrawals from their checking account and it ended up being in the negative and finally closed and turned over to collectors.
The payday loan collectors made their lives a living hell with phone calls at home and at work, all the typical problems that go along with standing debts.
They Found Help
When Mike an Pam came to us for help they were n legal trouble, had pawned everything they had of value and borrowed from family and co-workers.
They were out of options, and thankfully a friend pointed them our way.
After we renegotiated the amounts they owed with the loan company, (we saved them about 63% off their outstanding balance) we set them up on an 18-month repayment plan and today they are completely out of payday loan debt!
They wanted us to share their story to let people know they are not alone when going through this kind of a mess, and help is available!
With a little knowledge of how hi interest short term loans work Tom and Pam could have avoided most if not all of this story!
We at Help With Payday Loan Debt help people rewrite these stories every day and we hope if you ever need help with this kind of debt you give us a call!
Now it is your turn!
Any questions, comments or stories you may have can be left in the comments section below and we will address them promptly!