There is a new kind of loan that is being offered online to people nationwide, including here in Arkansas. The online loan business is gearing up quickly, offering certain advantages, such as quick approval times, lower interest rates and straightforward terms. However, some borrowers have overextended themselves by taking out too many online loans, thereby creating a situation where they are in too deep without a viable remedy. When that happens, many borrowers are learning how effective the bankruptcy remedy is for eliminating unsecured debt.
The online loans are currently being touted as the future of finance. That may indeed by a reasonable assessment because technological advancements continue to grow exponentially, making it likely that a great deal of business in the future will be conducted through digital resources. Additionally, the choice between going to an outdated branch bank with conservative, demanding loan officers and relaxing at home while a loan is being instantaneously generated electronically is a no-brainer for many people.
The money for the transactions is generated in Silicon Valley, one of the main centers also of the venture capital movement. Already more than a million consumers have obtained online loans of this nature. The problem arises, however, in that the relatively liberal lending policy of these entities are creating another bubble that could burst and lead many borrowers into crisis mode.
The loan companies are also starting to reveal some consumer unfriendly traits. For one thing, they generally demand that the payments be automatically withdrawn from the borrower’s account by electronic payment each month. Some over-extended consumers have had to close their accounts to escape the aggressive tactics. Furthermore, the companies are reportedly inflexible in modifying the loan terms when a person admits to being over-extended. In any event, whenever consumers in Arkansas or elsewhere face large unsecured debt loads, along with being stretched to the limit financially, the strongest and most popular way to get more quickly back on one’s feet is to wipe out the unsecured debt in a Chapter 7 bankruptcy.
Source: The Boston Globe, “Online loans may offer pitfalls for the unwary“, Michael Corkery, Sept. 14, 2015