Pay day loans companies have helped send the amount of personal debt in Londonderry soaring to more than £25m so far this year, the Citizens Advice Bureau (CAB) has revealed —and that may be just the tip of the iceberg.
The staggering level of unpaid arrears being dealt with by inundated CAB officers this year is almost twice that for the whole of 2011, it can be revealed.
The new figure, however, only equates to the debt being made known to CAB — meaning the true picture could be much worse.
CAB officers said the number of desperate people resorting to pay day loans with massive annual percentage rates (APR) to make ends meet has rocketed.
CAB’s money advice supervisor Liam Doran said financial difficulties were “pushing people over the edge”. He said: “Over the past couple of years debt has been going up and up and in the past three years it has doubled every year.
“Last year the total figure for the debt we dealt with was £13.7m. This year we have dealt with £25.1m and that is just up to the end of October. The year is not over yet.
“I am seeing 25 clients a week. That’s appointments and emergency cases such as house repossessions, bankruptcies and court appearances.
“At least half of the new clients I see will be presenting with pay day loans, where it would have been 10% a few years ago.”
He said the debt crisis across Northern Ireland and elsewhere was obvious from the amount of pay day loan operations springing up.
“We have seen one loan which had 1,500% APR. In one case there was a person in debt being phoned 30 times a day, which under guidelines amounts to harassment.”
He said that debt from house repossessions accounted for a large chunk of the overall debt in Derry.
“The most common we are seeing is property shortfalls. There are people who bought homes at the peak or just before the crash which have now more than halved in value.
“The shortfalls we have range from £10,000 or £200,000. Once a house is repossessed the mortgage company can still pursue you for 12 years.
“That in turn is leading to increased bankruptcies across the North.”
And CAB is now bracing itself for an upsurge in demand for help in the first months of 2013.
“In the run-up to Christmas people tend to spend without thinking of the full consequences and there will be a rush of people coming in for help with the debt,” added Mr Doran.
Anyone finding themselves in difficulties with debt has been urged to get in contact with the Citizens Advice Bureau at its debtline on 028 7137 0337 or email email@example.com
The Assembly has no fiscal powers to regulate pay day lenders, so there is little action that we can take against their practices.
I would urge the Consumer Council to look into the issue of exorbitant interest rates with a view to lobbying the Financial Services Authority to impose a cap. I have no doubt there would be 100% support from MLAs for such a lobbying exercise.
- Sinn Féin Foyle MLA and Enterprise Committee member Maeve McLaughlin