How do I get out of payday loan debt?

Payday loans can provide a quick and convenient way to borrow money - especially if you need it quickly. But what can you do if you start to struggle with your repayments?

Payday loans are designed to tide you over until payday, after which you pay back what you've borrowed (plus interest). However, if you allow that debt to 'roll over' into the next month, the charges could really start to add up.

What you should do

Try to work something out with your lenders. They may be more willing than you think to arrange some kind of reduced repayment plan. After all, they want to get their money back just as much as you want to get out of debt.

However, they will want to know you're repaying as much as you can. Which takes us on to the next point...

Work out a simple budget. Add up all your monthly living costs (things like mortgage/rent, bills and food) - but don't include your payday loan debts. Then subtract the total from your monthly take-home pay (remember to include income from any other sources, such as benefits, as well as allowances for other dependants sharing your property).

What's left is how much you can afford to pay towards your debts each month. If you find that your living costs are higher than your income, get expert advice as soon as you can.

Cut back on some of the things you don't need. We all like to have a few luxuries, but when you're in debt your repayments should take priority. And if you have arranged a new repayment plan with your lenders, they'll want to know that you're repaying your debt as quickly as you can.

What you shouldn't do

Don't ignore the problem. You are not the only person in your situation. Lenders (and debt advisers) deal with people who are struggling with payday loans every day, so you shouldn't hesitate to get in touch with them.

Some people worry about the consequences of being unable to meet their repayments, but delaying getting help could mean more interest and charges.

Don't keep on borrowing. Some people's first thought might be to take out another loan (e.g. another payday loan, or a debt consolidation loan) to pay off the previous debts. But if you're struggling, borrowing more could make the problem even worse in the long run.

It's much better to get in touch with your lenders or seek help from an independent debt adviser, who could help you put together an affordable repayment plan, and may even be able to arrange to freeze or reduce your interest and charges.

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