How to Get Out of Payday Loan Debt in Colorado
Determine key laws and tools surrounding payday loans in Colorado to help guide informed decisions now, and into the future.
Despite all the advantages and disadvantages, payday loans remain the most convenient option for people to meet immediate cash needs. Payday loans can cost you much more in the long run than you originally intended to borrow.
Payday loans can quickly become a trap for borrowers due to their high-interest rates and fees. The bill comes due, and they take out another commercial loan with yet more fees because they can’t pay it. Many predatory lenders are abandoning customers by using deception, and deceive consumers by approving loans in states where payday loans are illegal.
Below, are some of the essential facts about Colorado payday loan laws to help you make an informed decision about payday loans. Also, I will discuss how to get out of payday loans living in Colorado.
5 Important Colorado Payday Loan Laws to Know
1. In Colorado, payday lending is legal at a lower cost.
2. The maximum amount that can be borrowed through payday loans in Colorado is $500. One or more payday loans can be used to meet the $500 limit. Although payday loans in Colorado have no maximum terms, they have a minimum term of six months.
3. Payday lenders can charge up to 20% of the loan amount in finance fees for amounts up to $300. For every $100 above the first $300 borrowed, lenders can charge up to $7.50 on top of the standard finance fee. The law allows lenders to charge a 45% interest rate if a borrower renews a payday loan.
4. Law allows for repayment plans. Though, the terms of these plans can differ between lenders as long as they are legal.
5. The collection of outstanding debts is restricted under Colorado payday loan laws. For “insufficient funds” penalties, lenders can charge up to $25. Lenders can sue borrowers for unpaid payday loans for the total amount of the loan plus any attorneys’ fees. Borrowers cannot be sued unless they have closed their checking accounts before fully repaying the loan or debt.
Lenders are required to issue refunds for the prorated amount of the APR when borrowers fully repay payday loans before the loan term ends APR.
5 Ways to Get Payday Loan Debt Solution in Colorado
You must pay off your debts as soon as possible because these loans come at higher interest rates that accumulate until you pay off the debts. Usually, you need to pay the debt when you get your next paycheck, but lenders allow you 30-day extensions to pay.
It can seem impossible to get out of a payday loan when you have one. Fear not, there are ways to get the payday loan debt solution and get back on your feet. The sooner you can repay a payday loan, the better.
Here are some of the ways to escape the clutches of a payday lender:
1. Make Payment in Full
It is advisable to make your entire loan payments. This is undoubtedly the best way to eliminate your debt. Most of the lenders prefer it as well. With the help of a well-planned budget, you can afford it. When you make your payments in full, you needn’t worry about incurring extra debt.
Some states don’t allow you to obtain a new payday loan unless the earlier one has been paid off. Once you’ve made the entire payment, you can pay attention to improving your financial health.
2. Go for an Extended Payment Plan
You can work up an extended payment plan (EPP) with your payday lender. This will allow you to pay off the loan in smaller installments over a more extended period without incurring any additional fees or interest.
Examine your finances and determine the most significant amount you can quickly pay toward your loan each month before speaking with your lender. Make an appointment with your lender to discuss loan restructuring before the last business day before your loan is due.
If you need to sign a new loan arrangement for your EPP, study the terms and conditions well before signing. You’ll avoid any unpleasant surprises down the line this way.
Remember that not all payday lenders will participate in an EPP. However, it’s always good to inquire about your lender’s flexibility if you can’t afford to repay your loan within the set time frame.
3. Consolidate Your Payday Loans
Why should you consider payday loan consolidation to repay your predatory debts?
Usually, when there is a high-interest rate, all of your monthly payments go towards paying the interest rate payments. The interest payments are the minimum monthly payments you have to make. Thus, if the minimum monthly payment is a lot, you are unaware of making any more payments. Your principal amount remains intact, and your payday loans stay the same. As a result, decreasing the interest rate through negotiations will help you pay back your debts fast.
You may also avoid debt collectors as the payday loan consolidation company will deal with your creditors. Thus, you can decrease the interest rate on your payday loans to make total payments on them; you can also make single monthly payments to pay online.
Various companies offer such services. However, not all such companies are legitimate. Contact a reputed debt consolidation company to enroll in a consolidation program.
4. Settle Your Debts
Debt settlement allows you to get out of your debt situation. It will serve as a proposal to your creditors that you are unable to pay off your debts in full and that, as a result, you wish to pay off only a portion of your total debt. Most lenders and financial institutions will refuse to enter into a settlement agreement with you and argue over the lump sum amount you will offer. However, if you can strike a reasonable settlement agreement, all you’ll see is profit!
The first step, is to approach your creditors and lenders on your own and request that they reduce your overall principal amount to a discounted lump sum. The second step, is to locate a reputable debt settlement firm or debt law firm and hire them to complete the task. Following the second path will increase your chances of success. Working out a settlement agreement on your own is a difficult task.
5. Consider Taking Out a Payday Alternative Loan
Consider getting a payday alternative loan (PAL) if you belong to a credit union. The National Credit Union Administration allows federal credit unions to provide members with loans ranging from $200 to $1,000. When applying for a PAL, the credit union can only charge an application fee of up to $20 to cover the actual costs of processing the application. The borrower must be a credit union member for at least one month.
Getting a PAL can be a great way to pay off a payday loan and get out from underneath the high-interest rates. The length of these loans ranges typically from one to six months. During six months, the same borrower may receive up to three PALs.
Can You File Bankruptcy to Get Out of Payday Loan Debt?
Bankruptcy should always be a last resort choice. Declaring bankruptcy has numerous long-term consequences that will harm your credit for years. This is why it’s critical to evaluate all other possibilities before taking this path. If you have too many obligations and not enough money to repay them, bankruptcy may be possible. Payday loans and your other debts might be erased as part of a bankruptcy filing.
You should avoid getting into debt again. Payday loans are hazardous. Make an effort to raise your income and avoid living paycheck to paycheck. Payday loans are never a long-term answer for your financial need, but they can certainly harm your financial situation. Furthermore, many unlawful payday lenders utilize your bank account details for theft and other illegal actions. I hope you agree that payday loans should be avoided at all costs. Manage your money in a better way for a secured financial life.
Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California in 1998, and currently works for the Oak View Law Group in California as a Principal Attorney.