Disaster Strikes: 3 Real-Life Stories of People Crushed By Payday Loan Debt
There are thousands of stories online about people who have struggled with payday lending. Some accounts are worse than others, but their personal experiences always seem to have similar results; they all end up in a worse position than they were before their payday loan. While some people are able to take out a payday loan and pay it off with minimal damage, others can still be paying much more than they should in fees, just to get a small amount of money.
We have compiled some of the worst personal experiences with payday loans that we have seen. Danielle* actually wrote her story from her point of view, and her experience with payday loans may be the most terrifying. We hope these horror stories will show you just how damaging payday loans can be.
Danielle Marcus*
My payday lending story started in 1997 and lasted a full two years. My single loan of $500.00 ended up costing me approximately $3600.00 in fees. Not to mention the humiliation and stress that seemed to permeate the experience of renewing each and every loan.
During the latter half of 1997, I was faced with divorce. I found myself in a position of having to pay all of my expenses including full house payment, car payment, and utility expenses, in addition to attorney fees. Upon exhausting all of my savings, I started to come up just a little short every month. My credit was starting to suffer, and I was getting behind on my bills. I really only needed a short-term, small loan to stay afloat.
I didn’t believe my monthly shortages were worthy of getting into a bank loan, a refinance, or to bother my family with my need. I wanted to handle my shortness of income on my own, and I wasn’t too far behind…yet. And since the divorce was so hard on my daughter I needed to keep some stability in our household.
Every two weeks I raced into the lending institution to cover my $500 loan plus the $75 loan fee, and I’d take out a new loan. This occurred every two weeks for 2 years. At one point, I knew I wouldn’t make it across the bridge in time, and I called to ask that they hold my check for about a half hour. I was advised they would – come to discover they’d sent my check to my bank any way. So not only did I have bank fees, and embarrassment, but also additional fees with the payday lending branch.
The utter feeling of embarrassment, and humility were even worse, since I did have a good job – but couldn’t seem to pull myself out of the downward spiral of taking out a new loan every payday.
Fortunately, I was able to pull myself out of the cycle. I finally had it all paid off with a promise never to step into a payday lending institution again – A promise I have kept. I have also maintained my files to remind myself of the experience. I noticed how very easy it was to secure one of these short-term loans. It’s only a single page of paperwork, and they check to see if you have at least a dollar in your account. They do not, however question your ability to repay the loan, and offer no resources, should you experience trouble with repaying your loan.
Chris Young*
As a grad student, Chris* found it very difficult to pay off the four payday loans he had accumulated, since the lenders did not offer installment plans. When he would manage to pay off one or two of the loans, he’d soon find himself short on cash and forced to renew the loan.
He finally sought help, and went to a credit counselor. He sent letters to the payday lenders asking for an affordable payment plan, but instead of helping him work out payments, one of the lenders deposited his check upon receiving his letter. The check bounced twice before he could cancel it. Two other lenders automatically drafted his checking account. He had to close the account to stop them. When one of these lenders received Chris’s payment plan letter, they called and threatened to involve the police and serve him court papers.
Abby Brown*
Abby’s* first payday loan was for $100, with an $18 fee. She worked down the street from the payday shop, and when she found herself short on cash, she decided to use their services. Abby walked out 15 minutes later with the loan. She got caught up in the payday lending debt trap, taking out multiple loans to pay the fees on each one as they became due. At one point, she was paying $300 every two weeks for four different loans. Over a six month period, this added up to $3600, but she was in the trap much longer, paying off one loan, then another, until she lost her job and could no longer keep up with the fees. She filed for bankruptcy.
*Name changed to protect the borrower’s privacy.