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Michigan bankruptcy law: The problem with payday loans

For numerous Michigan residents, living pay check to pay check is very much a reality. Where can they turn when their financial obligations are just too great and there is not enough to make until the next payday? Rather than turning to a bankruptcy law attorney for guidance, some look to payday loans to help get them through it. Unfortunately, doing so often does more harm than good.

Payday loans are also sometimes called cash advances. These are offered by third-party lenders and simply offer an advance on a person's upcoming pay check. The companies that offer these loans can be found both online and at brick-and-mortar institutions.

If a payday loan is approved, cash is generally granted on the spot. Sounds ideal, but really this promise of fast cash is meant to prey on those who feel that they do not have any other options in the moment. While the instant money may help right when it is needed, it comes at a cost.

Payday loans are typically offered in relatively small amounts, and the fees and interest charges can be astronomical. In many cases, when one's next payday rolls around, there is not enough to pay back the loan and make ends meet until one gets paid again. This creates a cycle of borrowing and only increases one's debt.

A payday loan is really just a band aid solution. When one finds him or herself is a moment of economic desperation, it can sound like a good fix. The problem is, these loans generally do not fix anything. Michigan residents who want a permanent solution to dealing with their financial struggles can turn to a bankruptcy law attorney for assistance. With the help of legal counsel, one's entire economic situation can be reviewed and a debt relief plan created and put into action.

Source: investopedia.com, "Payday Loans Don't Pay", Jonas Elmerraji, Accessed on June 5, 2017

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