HALIFAX – When Bonnie Barrett was forced to furnish her entire apartment because of a bedbug problem, she found herself in a financial bind.
That’s when the Halifax woman, who has a disability and lives on a fixed income, decided to get a payday loan.
“I got suckered into it just like most people on low income,” she said. “I’m only making, on assistance, a little less than $600 a month, and that’s for my rent and everything. That’s everything that I have.”
One payday loan turned into another. Now she owes a couple hundred dollars and says there is no way for her to pay it back.
Barrett plans to speak at a public hearing Tuesday evening before the Nova Scotia Utility and Review Board, which is reviewing the rules surrounding payday lenders in the province.
“I didn’t realize how much it would build up after a certain amount of time,” she said. “It’s really, really hard to keep paying those loans at that interest rate.”
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Currently, the maximum cost of borrowing is set at $25 for every $100, compared to Manitoba’s $17 and Ontario’s $21.
The maximum default fee is set at $40 per loan.
During the morning session, economists, poverty groups and credit counsellors all had a chance to speak out, including Gordon Arsenault with Credit Counselling Services of Atlantic Canada.
“We have both experienced clients who have been brought to significant financial hardship because of these types of loans and many of these clients have had to be referred bankruptcy trustees,” he told the hearing.
Arsenault said despite the concern about rates and default fees, his greatest concern is the number of consumers who have concurrent and repeat loans.
“It’s an avalanche. They start with one and they figure ‘if I had just have one more I could carry the other one then I could take care of this.’ Then eventually, they’re in a situation where they’re just rolling with these payday loans,” he said to reporters afterwards.
However, the association representing payday lenders said their business is not an easy one and they don’t think major regulatory changes are necessary.
“We would like to see the rates stay where it is because it is a tough business to make a go of,” said Norm Bishop, the secretary of Canadian Payday Loan Association.
The UARB will accept written final arguments in a couple of weeks before making a decision.
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