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Home > Ask The Get Out of Debt Experts > I’m Drowning in Online and Local Payday Loans. I was Referred to Langhorne Debt Solutions. – Lacy

I’m Drowning in Online and Local Payday Loans. I was Referred to Langhorne Debt Solutions. – Lacy

I apologize in advance for the short response. I am currently away on vacation with limited internet but wanted to give you an answer as soon as possible. Steve

Lacy

“Dear Steve,

Currently have $2100 in payday loans, 4 online and one in town local. Cannot get ahead, and in fact with losing some of my income a couple of weeks ago, we are going down fast. I tried talking to my bank, tried talking to the lenders, they referred me to a place called langhorne debt solutions, they told me about the program but said to have my bank put a freeze on all ach debits to stop the fee’s coming in and then let them work with the lenders to reduce my payments and get this paid off. But my bank says they don’t do that. Don’t know what to do, need help!!!!

What do you recommend for getting out of payday loans, I am not in defalut with these loans but they are taking all our money and it is getting really serious now.

Lacy”

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The Answer

 

Dear Lacy

I took a look at the website for Langhorne Debt Solutions and it appears they are engaged in monthly payment debt settlements to resolve payday loans.

I think your financial ship is sinking; abandon ship. I’m afraid that at this point the only logical solution is going to be bankruptcy to end the old debts and give you at leat a chance of living within your current income. Any other debt solution would be foolish to try at this point since there would be no cessation in collection activity and you still risk facing criminal charges for writing bad checks for the payday loans or being sued for the bad payday lenders.

Big Hug!

Im Drowning in Online and Local Payday Loans. I was Referred to Langhorne Debt Solutions.   Lacy
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Sandy

    I read your answer to Lacy about her payday loans, and think that you need to rethink your solution. First of all, bankruptcy for 2100.00 doesn’t make any sense, it is a long term solution to a short term problem. Second, a person who defaults on payday loans is not in jeopardy of criminal charges. In order to be charged for passing bad checks, the person holding the check (which doesn’t even exist if it was an online loan) has to prove that the person writing the check intended to defraud them by writing a check for money they did not have. Since the loan company knew they didn’t have the money at the time, they could not make a case for being defrauded by the consumer.

    Additionally, most of these payday loan lenders are operating illegally. If the consumer looks into the issue, they will probably find that the lender does not have a license to legally make loans in their state. I am surprised you would even suggest there may be possible criminal charges, when most people are aware that defaulted loans are only a civil case. It makes me think that you are in the employ of the payday loan lenders. If you were honestly giving your best answer, then you need to do a bit more research.

    • Dcw

      Thank you! I agree. Also most states payday checks can’t are not considered a bad check and no criminal actions can be used.

      dcw

  • Dean

    I have 7 payday loans out and about $8,000. Im paying $1400 every two weeks to float these, and am at the point where i cannot pay on these anylonger. I am wondering if Langhorne Debt Solutions is a reputable place to go. As i’m sure you know, they claim to be one of the only specialist in payday loan consolidation etc etc. I’ve read just a few other forum responses from public boards and the it appears they have decent reviews, and some even write they have had a pleasant experience there.

    I wanted to work out payment plans with my loan centers but only one is willing to and its over only 4 payments, correlating into a pretty high amount still.

    The other problem that persists of course is that all these loand centers have post dated checks of mine that they will deposit if i dont make a cash pmt on my loan, and the checks are for the entire amount.

    Please give me your opinion if you will. I sure would appreciate it.

    Best regards,
    Dean in Texas

    • http://GetOutOfDebt.org Steve Rhode

      Dean,

      You might want to go back and read my advice to Lacy, click here.

      Steve

  • http://www.langhornedebtsolutions.com Dennis Williams

    I don’t know where you got the idea that they “don’t budge.” My one tiny company has settled over $5,000,000 worth of these loans (which average a little of $300 in principal) at an average of 49.28% of the balances since we started, including more than $400,000 settled in the past month alone.

    Having said this, I fully agree with you that for some people bankruptcy is the only sensible option. My first position as a lawyer was in a general practice firm where I specialized in personal bankrutpcy, so I am speaking from experience on that point. But, having said that, I also believe that:

    1) Neither of us knows enough about Lacy’s overall financial picture to make that recommendation to her.

    2) There are enough tools available (not including debt settlement companies like Langhorne) to deal with payday loan problems – including non-profit credit counseling, mandatory extended payment plans for storefront loans, referral of possibly illegal loans to state regulators and self-help negotiation by the borrowers themselves – that people whose debts are PRIMARILY payday loans are unlikely to need the protections of bankruptcy.

    • http://GetOutOfDebt.org Steve Rhode

      Dennis,

      Would you be willing to take Lacy on for free so we can use the results you guys can achieve and feature them here. It might be a great opportunity for many, including myself, to see your services in action.

      Steve

  • http://www.budgetsaresexy.com J. Money

    Wow, you gotta love the attention companies are giving us bloggers these days! It helps everyone involved, so awesome.

    I’m not going to take sides on this one as it seems that both parties are trying to help the reader asking for advice, but I do have to agree that filing bankruptcy does seem a bit hardcore. Especially for only $2k in debt (“only” in that usually you hear about those 20, 50, 100k filing away – $2k is a lot of money, but I wouldn’t think bankruptcy would come into play at that point). Then again, I’m no expert in the area.

    Great overall discussion though, I hope Lacy gets it all worked out :)

    • http://GetOutOfDebt.org Steve Rhode

      I understand what you are saying that with only $2,000 in payday loans that bankruptcy seems extreme. Unfortunately in America today the only legal recourse a consumer has to end a bad debt situation is bankruptcy. Consumers have no other power to get any creditor to accept a fair and reasonable repayment plan. The debtor could potentially engage a lawyer to fight the battle but the legal costs will mount as well and provide her with no protection.

      Payday loans are especially nasty to deal with and unless some action is taken to intervene in this situation, the debts will rapidly increase. The issue becomes if these payday loans will not budge, which they don’t, and there is no income or expectation to be able to repay these loans, and doing nothing can lead to being sued, bankruptcy seems like a reasonable course of action, only since no other solution exists. One should.

      Steve

      Steve

  • Dianne Flowers

    I need to consolidate 2 payday loans and 2 singure loans
    please HELP

  • Lori

    People who are having trouble paying online payday lenders off also need to find out the laws in their states. I know 8 out of 9 lenders I borrowed from did not have a license to lend money in the state of Alabama. Even if they did they still broke several laws. 1. max to lend is $500 (a few lended more) 2. APR too high 3. And can only roll over once (all but one rolled over repeatedly).

    I was told by someone in legal dept for banking to do stop payments on all of those not legal for one penny and up and then send a letter revoking authority to debit my account. They will still ignore the letter and the stop payment and the funds will try to come out and be placed on hold until they see there is no way it can go, so go open another account and leave this one alone.

  • http://www.langhornedebtsolutions.com Dennis Williams

    It is true that our program works best for online loans, but it is not a question of a legal loophole. It is pure economic sense for the consumer. It simply does not makes sense for someone to pay our fees when in most cases they can work out the same payment arrangements with their local storefronts for free.

    And we tell our clients so BEFORE they make any payments to us, both verbally and in writing. While I appreciate the critique of our website, I would like you to know that we do provide each client with a unique, written analysis of their situation once the client provides us with a list of their creditors.

    The analysis explains who each of that client’s lenders are and what our approach to settling each loan will be. In the case of storefronts, again we discourage including them because it makes no economic sense for cash-strapped consumers to do so. But there are those people who, for a variety of personal reasons, want to include these loans despite our disclosures.

    Turning to your question about whether borrowers face civil or criminal liability for a dishonored postdated check requires 51 different answers – one for each state and the District of Columbia. Some states, like California, specifically exempt post-dated checks given as security for payday loans from their bad check laws. Other state laws are less clear. Anyone requiring legal advice regarding the laws of their state should consult with a local attorney.

    Finally, you ask about an assurance about consumer liability for preventing lenders from accessing their account. Frankly, I don’t understand the question. The Electronic Funds Transfer Act and the National Automated Clearing House Rules both explicitly permit consumers to revoke a creditor’s right to electronically debit his or her accounts. (You need not take my word for this. Both documents are available online and there are numerous explanatory letters about them on the websites of the Federal Trade Commission and various state banking regulators.)

    All we are talking about are practical steps consumers can take to ensure that those rights are respected by the lenders. Immediately upon a consumer beginning our program, Langhorne Debt Solutions revokes each lenders’ electronic debit authorization on their behalf. Once that revocation is out, it is none of the lenders’ business where the consumer chooses to bank. But unfortunately some lenders act as though they are above the law. Regardless of the consumer’s revocation of ACH authority, they continue trying to debit an account, often forcing it into the negative with repeated NSF fees. Closing an account or using a freeze (assuming the bank offers this option) simply protects the consumer in this situation from UNLAWFUL activity occuring in their bank accounts.

    Remember, we are not talking about using an ACH freeze or even closing a bank account is not to be used to prevent a LAWFUL debit. Indeed, we encourage our clients to contact any other creditors that they have and immediately arrange for an alternative form of payment or to provide them the information necessary to begin debiting their new accounts, should they choose to open one.

  • http://www.langhornedebtsolutions.com Dennis Williams

    I’ll try to answer your questions one at a time.

    Our fees are based on the amount of debt that is place with us for settlement. Because payday lenders can charge as much as 30% interest every two weeks, we do not rely on their calculations of the balance. Instead, we base it on what the client actually borrowed, which we use to calculate both our fees and the estimated settlement amount. Clients are asked to place a set amount into their own bank account at regular intervals. (We do not hold client money in trust. The client is always in full control of his or her own money.)

    I should add that the fees are on a sliding scale and as the program progresses we take less and less out of the budget as fees and more and more remains in the client’s savings for use in paying creditors. Typically in the fourth or fifth month, the client will have enough saved to begin making offers.

    The Electronic Funds Transfer Act itself, National Automated Clearing House Association rules and various decisions made and regulations promulgated by the Federal Trade Commission all speak clearly on the rights of consumers regarding stop payment orders, revocation of ACH authorizations and even account closures. I refer you to those sources.

    We do not automatically exclude individuals with storefront loans from our program. However, we do require that additional disclosures be made to the consumer before we will include such accounts. This includes, but is not limited to disclosure that:

    1) Storefront lenders have greater legal recourse because, in most cases, they are holding post-dated checks and because their proximity to borrowers makes it more cost-effective to pursue such claims.

    2) Because they have such recourse, storefront lenders are much less likely to significantly discount their balances in a settlement program. In most cases all we will achieve is the same payment arrangement the client could make for him- or herself. Many storefront lenders are members of the CFSA and will allow borrowers to enter no-interest extended repayment programs. Accordingly, it makes little economic sense for someone to pay our fees on top of those arrangements, unless it is a consumer who for personal reasons simply refuses to deal directly with the store manager.

    I would urge anyone who comes to your board for advice to make an effort to settle their storefront loans on their own before paying anyone – including Langhorne – a fee to do so on their behalf.

    • http://GetOutOfDebt.org Steve Rhode

      Dennis,

      Thank you for posting your comments, clarifying your position and taking the time to respond. It is a great benefit to me and the readers of this site.

      Please correct me if I am wrong here. I want to make sure I understand Langhorne Debt Solutions 100%.

      At Langhorne Debt Solutions you have found a good way to deal with online payday loans since those are not covered by traditional bad check civil and criminal penalties. Since “Nothing in the federal Electronic Funds Transfer Act elevates these transactions to the level of true checks…” Smart loophole.

      Your services are most beneficial to those that want to settle their debt owed from an online payday loan lender and prevent anyone with an online payday loan from facing any legal action as a result of stopping payment.

      Am I right in assuming that people still face potential legal civil and criminal issues from defaulting on only a payday loan where they presented a physical check?

      In the case of Lacy, who said that her bank would not block the ACH debit of her account, a situation that I myself have experienced, what advice do you have to then block further unwanted debits from the persons checking account?

      Finally, I think you accidently missed one of my previous questions in your last response. Will you or do you guarantee in writing that closing your bank account to prevent the authorization of funds access to the payday lender will not result in any civil or criminal penalties?

      I went back and spent more time on your site and did not see any clarification of the difference between an online payday lender and a storefront payday lender and your emphasis on online payday lenders. I suppose this is why my assumption with the Lacy question was that it was a storefront lender rather than an online lender. This might be something you may want to add to your website. It’s good information that people would be interested in knowing.

      Steve

    • http://GetOutOfDebt.org Steve Rhode

      Dennis,

      I didn’t see a response to my last response to you. I’m hoping that you got the notification that I responded. I’m very interested in continuing this conversation and finding out the answers to my remaining questions.

      Steve

  • http://www.langhornedebtsolutions.com Dennis Williams

    Perhaps you might consider contacting me to discuss the program this company offers rather than taking guesses when answering questions about it. Your description of how it works is flawed and misleading.

    Langhorne Debt Solutions is a debt settlement company. We negotiate lump-sum compromise settlements of the full balance owed to payday lenders, rather than the monthly payments you describe. Moreover, there are no post-dated checks used for online payday loans. Borrowers give ACH debit authorizations – a form of electronic funds transfer -instead. Nothing in the federal Electronic Funds Transfer Act elevates these transactions to the level of true checks, and after 15 years of practicing law, I am unaware of any state criminal code that does so either.

    What Lucy is describing is an ACH “freeze.” The Electronic Funds Transfer Act permits consumers to revoke lenders’ authorizations to debit their accounts. (An important difference between ACH debits and paper checks!) And while most payday lenders do honor a consumer’s written revocation there are, unfortunately, those who do not. Accordingly, we advise consumers like Lucy to consider various options to ensure that their rights in this regard are respected by ALL lenders.

    Finally, you suggest that Lucy file for bankruptcy protection. I represented hundreds of clients in bankruptcy before moving on to other areas and eventually to Langhorne. What you advise is an extreme solution that would necessarily have far reasing implications for her, both good and bad. In the absence of a far more complete picture of Lucy’s financial condition, advising her to take such drastic action seems somewhat reckless. Such advice, in my opinion, should only come from an attorney licensed to practice in the jurisdiction where Lucy resides.

    • http://GetOutOfDebt.org Steve Rhode

      Thank you for your comments.

      In order to help clarify the information about your company can you please share with us more information about your company?

      I’m curious what your fee schedule is or how the fees for service are determined?

      Will you or do you guarantee in writing that closing your bank account to prevent the authorization of funds access to the payday lender will not result in any civil or criminal penalties?

      Do you only help people with online payday loans or payday loans from traditional storefront cash advance companies as well?

      If you don’t help people with brick and mortar payday loans, what advice do you have for them to deal with those types of cash advance loans?

      Steve

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