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Avoid the trap of payday loans after a bankruptcy

The discharge of debt you received after your personal bankruptcy was most likely a great relief. You no longer have to worry about insurmountable credit card bills, and your expenses have been reduced. However, life can be uncertain, especially when you are just recovering from a bankruptcy. You might have been hit by an unexpected medical bill or lost your job during a particularly vulnerable time. If you are like many other South Carolina residents, the thought of a “quick fix” payday loan may be tempting when you are continuing to struggle financially.

However, one payday loan can easily turn into a vicious borrowing cycle, warns Bankrate. Additionally, payday loans usually come with high interest rates, sometimes as much as 300 percent. If you take out a payday loan, you might easily fall into the trap of needing to borrow from the company each pay period to cover your expenses and repay the previous loan. The following alternatives are far preferable to falling into the payday loan trap:

  • Consider getting a second part-time job or asking your boss to work overtime.
  • If the expense can be delayed, save up until you are able to pay in full.
  • Obtain a small, low-interest loan from a credit union – many credit unions and small lenders are willing to work with people who are recovering from a bankruptcy.
  • See if a family member or a friend might be willing to lend you money – but be sure you have the means to follow through with repayment.
  • Sell plasma, which has the double benefit of improving someone else’s life.
  • Speak with a financial advisor about ways to manage your expenses and have enough left over for unforeseen circumstances.

Financial struggles are, unfortunately, a normal part of life now and then, especially when you have just gone through a bankruptcy. There are ways you can improve your credit and get yourself out of a bind without having to resort to a payday loan.

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