Denver Bankruptcy Attorneys Wink and Wink Tell You Why
If you find yourself thinking about borrowing money to pay off other money you’ve borrowed – or if you already have debts stacking up against you with no money in the bank to pay toward them, you might be tempted to take out a FinTech loan, a new way to borrow money quickly from an online company.
And although in recent years, FinTech companies have grown considerably in popularity among desperate consumers, don’t be fooled: there are dangers to taking out a loan from these companies that could set you back financially even further. So why are these FinTech loans so bad? And what are your other options when it comes to seeking relief from your debt?
What is a FinTech Loan?
First things first, FinTech is short for “financial technology.” FinTechs are online companies that deal in high-interest personal loans, especially for consumers looking to refinance large amounts of debt.
Early this year, FinTech firms surpassed traditional lenders, like banks and credit unions, to become the United States’ top source of personal loans. By the end of 2019, one-third of the 20.8 million Americans with a personal loan borrowed money from a FinTech firm. And with a record high of $4.2 trillion in consumer debt last year, more than ever, Americans are looking for easy ways to pay down what they owe.
Why FinTech Isn’t the Answer to Your Debt Problems
We all remember the unsustainable consumer borrowing of the 2000s, when Wall Street banks over-lended money Americans couldn’t pay back. Financial experts fear the very same thing will happen thanks to FinTech companies’ rise to prominence. It’s very easy to get approved for a personal loan via a few mouse clicks – a dire situation for Americans like you, as you desperately try to find a way to consolidate or lower your debt.
FinTech loans likely do help some Americans manage their debt, but the surge in lending and future massive defaults over the coming months post-COVID-19 could be catastrophic for consumers and their credit scores.
Deregulation of Lenders Could Spell Disaster for Debt Relief
Earlier this year, the Office of the Comptroller of Currency, which regulates federally-chartered banks, announced that a new rule would allow online lenders to offer loans over state interest-rate limits. The Federal Deposit Insurance Corporation followed suit with an equivalent rule for state-chartered financial institutions.
The Office of the Comptroller of Currency is currently working on a second proposed rule that declares a national bank the “true lender,” which may enable FinTechs to sidestep banking regulations.
With so much active deregulation of the FinTech industry, these companies are finding loopholes that allow them to extend loans that take advantage of desperate consumers, through tactics like large loan amounts, massive interest rates, and unreasonable annual interest rates.
The Danger of Loans from FinTech Companies
It seems too good to be true: you can go online and be instantly approved for a personal loan to help you consolidate or pay down debt – or make ends meet in an already tight financial situation. But you know what they say about things that seem too good to be true, though, right? They probably are.
Many FinTech companies offer loans in four or five figures, with interest rates sometimes exceeding 30 percent. And with annual interest rates running nearly 300 percent, these loans look more like those from a payday lender than a reputable financial institution.
While you can find some FinTech borrower success stories online – consumers who successfully got out of debt thanks to one of these quick loans – the danger of such high-interest loans can put borrowers like you in an even more precarious situation and ultimately compound unmanageable debt.
So how do these FinTech companies stay in business with the potential for so many loans to default? The high interest consumers pay offset the loans that default – and those companies issue more loans to other consumers to stay in the black.
How to Get Out of Debt the Right Way: Denver Debt Relief Attorneys
If you’re on the verge of declaring bankruptcy, or you feel overwhelmed by your current debt obligations, the answer to your problem is never “take out another loan,” no matter how tempting it may be. Instead, contacting a debt relief attorney near you will result in a concrete plan to free yourself from your unmanageable debt, and you’ll have professional help in seeing that plan to fruition.
Bankruptcy attorneys Wink and Wink, for example, can help you with Chapter 7, Chapter 11, or Chapter 13 bankruptcy, debt relief, debt settlement, and tax resolution, by going to bat for you and working with your creditors to lower your debt obligations – or fully eliminate them, in the case of bankruptcy. Your options for debt relief could include:
- Bankruptcy: a legal process to get out of certain types of debt based on your ability to repay. (Not all debt is forgiven through bankruptcy; consult a bankruptcy attorney at Wink and Wink to learn whether all of your debt will resolve with bankruptcy.) Bankruptcy applies to individuals, small businesses, and corporations.
- Debt settlement: negotiating directly with your creditors – outside of bankruptcy – to come to an agreement on a reduced balance you owe, including to credit cards and for medical bills.
- Tax resolution: achieved by setting up comfortable payment plans and compromising on the amount owed. Tax resolution can protect you from unfair wage garnishment or levying funds in your bank account.
If you live in the Denver area, including communities like Aurora, Arvada, Littleton, Lakewood, Englewood, Centennial, Thornton, Broomfield, Henderson, Golden, or Superior, you can turn to Gigi and Mike Wink, bankruptcy attorneys, for help.
Request a free legal consultation for straightforward advice on how to proceed with resolving your financial situation, and get a second chance at financial freedom today. Call us at 303-410-1720, or contact us online to get started.