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Do Payday Borrowers Pay More in Interest than They Borrowed?

According to a study by the Consumer Financial Protection Bureau, more than 60% of payday loan borrowers take out at least seven loans in a row — the point at which interest paid exceeds the original loan amount.

For example, one woman took out $800 in payday loans to help pay for rent after losing her job, but after rolling over her first loan and taking out another one to pay for it, she has already paid $1,400 towards the debt and still owes more.

The problem is that borrowers cannot afford to pay off their first loan, forcing them to roll over their debt into a perpetual “revolving door of debt.”  Over 80% of all payday loans are rolled over or renewed within two weeks.

These kinds of stories are happening all across the country.  For the entire article: http://money.cnn.com/2014/03/25/pf/payday-loans/index.html?section=money_pf

If you are someone you know is stuck in an endless revolving door of payday loans, please schedule a free consultation with an experienced debt settlement attorney who can likely help negotiate a significant reduction in the amount claimed due.

 

 

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Kevin Fallon McCarthy is the McCarthy Law PLC’s managing attorney and an experienced Phoenix debt attorney. Mr. McCarthy has also worked as general counsel for a large corporation. He has corporate counsel experience in human resource matters, general corporate governance, and union class action litigation.