Many borrowers turn to payday loans when they fall upon hard times. Once you are involved in the cycle of payday loans, it can be nearly impossible to break free. If you miss a payment, you can rack up thousands of dollars in fees. J.P. Morgan Chase Bank has taken the lead in setting new rules that protect borrowers from predatory lenders and exorbitant fees.
The issue at hand
Fifteen states have made payday loans illegal. However, online lenders have found ways to circumvent these laws and loan money at usurious rates to borrowers by providing their services online. Online lenders may be located in a different state that observes different laws on payday loans. They may also be based overseas where there are few to no laws regarding payday loans and predatory lending. As a result of these loans, some borrowers can find themselves in a hole of debt that they can’t dig out of.
The borrower’s predicament
When a borrower chooses a payday loan, they are charged interest rates that can be as high as 500%. Some states also allow lenders to add administrative fees on top of the interest charges. Even though the borrower has the best intentions of repaying the loans, things may happen that derail their budget even further and cause them to miss a payment. The borrower then finds themselves being hit with late fees and more interest charges by the lender. They will also see hundreds or even thousands of dollars in fees charged by the bank that holds their checking or savings account. These fees can include an overdraft fee for each transaction that was declined due to insufficient funds. They may also be charged an additional fee for each day their account is overdrawn.
What Chase plans to do
J.P. Morgan Chase Bank has decided to make an attempt to help payday loan borrowers. Chase has come up with some in-house rules that limit the amount of fees that will be charged to their customers who find themselves in trouble because of a payday loan that they can’t repay. Chase is limiting the types and amounts of overdraft fees for customers who need a little help. Chase’s new plan to help their account holders is expected to go into effect near the end of May. No other banks have followed Chase’s lead yet, but it is hoped that the other big banking institutions will take the same initiatives to assist their customers.
What you can do
You may find yourself in this situation. You ran short on cash, so you took a payday loan knowing that you could pay it off when it came due. However, emergencies happen, payroll may get messed up and paychecks are short, or something else could have come up that caused you to be unable to repay your loan. The payment is debited from your account but you don’t have the funds to cover it, so your account goes in the negative. If your bank doesn’t offer the new protections and assistance that Chase does, there are other options. One of the best options is to contact a qualified bankruptcy attorney. Your attorney can help you file for protection under the bankruptcy laws. Your negative balance at the bank will be resolved and you will be able to break free of the payday loan cycle.
If you are having trouble with debt and need a fresh start, contact a qualified bankruptcy attorney today. Bankruptcy laws allow you to fix your debt and move forward with a clean slate and less stress.