Payday Loan Crisis: One in Four Insolvent Debtors Have Payday Loans

KITCHENER, ON, Feb. 21, 2017 /CNW/ - Hoyes, Michalos & Associates Inc., a leading Ontario insolvency firm focused on helping individuals resolve personal debt problems, has issued a pre-release of their bi-annual Joe Debtor study focusing on trends in consumer insolvencies.  The study results reveal that a record one in four people who file for insolvency in Ontario use payday loans, a 38% increase in the last two years.

Despite warnings about the high cost of payday loans, heavily indebted consumers are using multiple payday loans from more than one payday loan lender. This is contributing to a record number of insolvent debtors with payday loans. Ontarians who are already severely in debt are turning to payday loans, not to pay for an occasional emergency expense, but to keep up with their other debt repayments.

"The increased use of payday loans among already heavily indebted Ontarians is frightening," says Ted Michalos. "Payday loans have become the straw that breaks the camel's back for many people, leading to an alarming increase in the percentage of payday loan induced insolvencies."  

"Contrary to popular opinion, using payday loans is not limited to low income households without access to other forms of credit," adds Doug Hoyes. "In fact, middle and high income earners are much more likely to use multiple payday loans if they have pre-existing debt, creating an even worse debt burden that they cannot hope to repay." 

Key facts about payday loan related insolvencies from the Joe Debtor 2017 report:

  • One in four (25%) insolvent debtors carry a payday loan, up from 18% in our previous study two years ago.
  • The average insolvent payday loan borrower has 3.4 payday loans outstanding, totaling $2,997. Less than one in three insolvent payday loan borrowers have only one payday loan outstanding.
  • An insolvent payday loan borrower has $1.21 in payday loan debt for every dollar of their monthly take-home pay. They owe more in payday loans than they earn in an entire month.
  • The average individual payday loan size is $891.
  • Payday loans make up 9% of the insolvent payday loan borrower's total unsecured debt of $34,255.
  • 68% of insolvent payday loan users have a take-home pay above $2,000 a month.
  • High income earners are much more likely to take out multiple payday loans. Insolvent payday loan borrowers with take-home pay over $4,000 a month had an average of 3.8 payday loans outstanding.
  • Young millennials are most likely to use payday loans, with 38% of insolvent debtors between the ages of 18 and 29 having at least one payday loan.
  • Seniors carry the highest payday loan debt with the average insolvent payday loan borrower aged 60 and over owing a total of $3,593 in payday loan debt.

"As Licensed Insolvency Trustees, we meet with people every day who are struggling to repay high interest loans. We are issuing a pre-release of our Joe Debtor study with this payday loan data in advance of public hearings to be held by the Standing Committee on Social Policy on Bill 59 and the Putting Consumers First Act. In doing so, we hope to ensure that legislators have the information they need to ensure changes to Ontario regulations surrounding payday loans really do put consumers first and reduce the likelihood that already debt burdened Canadians will be caught in a never-ending cycle of payday loan borrowing," said Mr. Hoyes.

Additional data regarding the use of payday loans by insolvent debtors can be found in the study background material at

About Hoyes, Michalos & Associates, Inc.

Hoyes, Michalos & Associates Inc., a Licensed Insolvency Trustee firm co-founded by Doug Hoyes and Ted Michalos in 1999, has established itself as the leading voice on personal debt issues in Ontario. Hoyes Michalos provides real debt management solutions to help Ontarian's climb out of debt, including consumer proposals and personal bankruptcy, with offices throughout Ontario. Further information is available at

SOURCE Hoyes, Michalos & Associates Inc.

For further information: Douglas Hoyes, CPA, Licensed Insolvency Trustee,; Ted Michalos, CPA, Licensed Insolvency Trustee,, 1-866-747-0660


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