Trapped in a Payday Loan Cycle – Dave and Jessica’s Story
Dave and Jessica are both in their early 40s, married with steady jobs, a home and three children – a typical, young family working to make ends meet.
Unfortunately, a month came where they were unable to completely cover their family’s expenses. Due to some financial hardships in the past, Dave and Jessica felt their only (and quickest) option was to go to a payday lender and take out a small loan in order to cover the shortage this month.
“And then we got our paychecks the following month, and half was already gone to pay back the lender. So, what option did we have but to borrow again?”
What started as a one-time, small loan led the couple into a very stressful payday loan cycle with no end in sight. By the time they found the courage to reach out to a Licensed Insolvency Trustee at Smythe, Dave and Jessica owed money to four different payday loan outlets – all the money taken out to pay existing loans, plus the rapidly accumulating interest.
The Trustee carefully assessed this family’s situation and filed a consumer proposal that eliminated more than half of Dave and Jessica’s debt. The couple ended up consolidating their debts into one, interest-free monthly payment relieving them from the over 40% interest rates they were battling each month.
The Trustee was also able to negotiate a reduced payment for the first six months of the consumer proposal to give Dave and Jessica some breathing room so that they wouldn’t find themselves in a situation where they were needing to borrow money again.
At the end of their proposal, the couple will pay back $20,000 of their debt. Had they continued struggling and desperately trying to get out from under their payday loans, they would have ultimately paid over $102,000.
Dave, Jessica and their young family are now utilizing a budget, making their monthly payments on time and are even saving money for a family vacation to Disneyland.
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