Friday 03 February 2012

Debt advisers are becoming increasingly concerned about the millions of low earners who are relying on payday lenders to see them through to the end of the month. Payday lenders target people on low income with interest rates as high as 4000%. Many thousands of people are ‘zombie’ debtors who only pay the interest off the debt, not the capital, and so never escape their debt. Jacqui Scott, a paralegal specialising in debt advice at Ridley and Hall solicitors, Huddersfield commented:

“ Last month, Citizens Advice reported seeing a four fold increase in the number of people with payday loans seeking debt advice in the first quarter of 2011 compared to 2009. It’s about time that the Government recognised that those companies offering pay day loans should be regulated.  It happens all too often that those who rely on means tested benefits for day to day living are enticed into pay day loans with higher interest rates and fees than any High Street lender.  This can potentially lead to a cycle of debt.”

She added “research has shown that 32% of those who take out a payday loan had to get another one to pay it off.  Although it could be argued that there is a place within our society for high risk lenders for those on low incomes who can’t make it ‘to the end of the month’ it’s not right that they can get away with any figure they think of. There should be a cap on interest rates and fees to prevent spiralling debt problems.”

For practical, personal debt advice, contact Jacqui Scott on 01484 538421. Free legal aid may be available.