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Types Of Debt

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If you have payday loan debt in Vancouver or anywhere in BC and feel you have no way out, our Licensed Insolvency Trustees can help. We understand that even the most thought-out financial plans can hit unexpected complications. Many people have turned to short-term loans in a last-minute attempt to manage finances. However, this short-term "fix" may leave you thousands of dollars in debt - with limited repayment options.

How Payday Loans Work

Many people who have a financial setback turn to payday loans for relief. Whether they have a past-due bill or require cash before their next pay cheque, they often rely on payday lenders to solve the problem. These short-term lenders generally offer up to $1,000 to cover urgent expenses.

Unfortunately, payday loans feature astronomical interest rates, making them one of the most expensive options for borrowing money. Often, borrowers find themselves in a never-ending cycle of frequent borrowing and excessive debt.

Canadian Law and Payday Loans

To protect people from these debt cycles, Canadian law limits payday loans to a maximum of 60% interest per annum. For example, in British Columbia, lenders can only charge $23 for every $100 borrowed, including administrative fees. The Criminal Code of Canada counts any infractions of this law as criminal offences. Unfortunately, even these limitations on interest rates make the repayment of payday loans very difficult once you are caught in the cycle of debt.

The first step toward reducing debt is knowing your legal rights. Here are some essential reminders about payday loans:

  • You may cancel your loan within 24 hours of signing the paperwork - at no cost.
  • The loan agreement must state all terms, conditions and fees.
  • The lender cannot charge you for paying off debt before the determined due date.
  • Online lending companies may ask for an upfront payment on your payday loan; however, this is illegal. They should include this expense in the loan amount.
  • You can only apply for one loan at a time.
  • You cannot rollover or extend a loan to pay another outstanding loan.
  • Lenders cannot grant you more than 50% of your net income.

Canada has established these rules to protect borrowers from excessive debt. If you've taken out more debt that you can manage, we can help.

Know Your Rights around Debt Collection

Sometimes people may not be able to pay back their loan on time and the payday lender will attempt to collect the money. All companies that collect a debt from a BC resident must follow the BC debt collection laws. This means that when trying to collect an outstanding debt, a payday lender must follow BC debt collection laws. Contact any of our offices in VancouverVernonPrince GeorgeVictoria or Surrey for debt relief.

Contact a trustee at 604-689-4255 to begin eliminating your short-term loan debt in Vancouver today!