One of the most frustrating situations a credit counselor encounters is a client in the payday loan trap. The client took out a loan to help stretch his paycheck and now finds he is unable to repay the loan without falling further into financial distress.

The problem is people can rarely afford to repay the payday loan in full. If they do it leaves them without enough money to meet their essential expenses, so they return to take out another loan or, even worse, they obtain loans from more than one payday lender.

To make matters worse, payday lenders typically will not accept payment plans or partial payments. Instead borrowers pay off the first loan and immediately take a new one with a new fee. It is like getting a small bank loan and making payments, but at the end of the year you still owe the same amount you originally borrowed; all you have paid is the fee. Imagine paying $30 twice a month for 12 months ($720) and still owing the same amount you borrowed.

So, how do you get out of the trap? The first thing to do is find out what rules your state has about payday loans. The website, http://www.paydayloaninfo.org/, has links to each state’s laws regarding payday lending. Over half of the states have rules prohibiting prosecution of the borrower if their check does not clear and another eleven states have rules that require loan companies to offer a payment plan if consumers cannot pay the debt in full.

The second step to beating the trap is your budget. How much can you afford to pay towards your debts? What are your most important expenses? Are you scurrying around trying to keep up with your payday loans while your mortgage, rent, utilities, or car payments are falling behind? Prioritize and take charge of your finances. Contact a credit counselor who can help you put together a plan for getting out of the trap and achieving your financial goals.