Debts from payday loans have increased 42 per cent

An increasing number of charities and local MPs, such as Lucy Powell from Manchester as well as David Wright from Telford, have been warning on the usage of payday loans by families to pay their monthly bills. A report has been issued that shows the number of people seeking help from StepChange has surged year over year, and almost 44,000 cases have been addressed by the charity so far. But it is estimated that tens of thousands of other people have not requested assistance yet as they are ashamed that they have had to turn to a payday loan to get by.

While there are new regulations that will take effect next year, they may not due enough to address the problem. Many organisations and government officials want even more done, including Ms Powell. The number of residents seeking help for debt arrears in the greater Manchester area is even higher than the nation average, and Ms Powell and many others want a cap on the loans that will be both enforced and stricter than what is called for.

Others, such as Labour leader Ed Miliband, want to stop a lender such as Wonga from creating adverts on certain TV programmes. Telford MP David Wright has also asked for more to be done, as there has been an over 60 per cent increase in the number of people seeking help from the Citizens Advice Bureau in Telford.

What is starting to happen is families across the nation are struggling to both pay back the payday lender and keep up with their other bills. There is a dramatic increase in the number of tenants facing rent arrears, being evicted, people turning to free groceries from Trussell Trust food banks, and repossessions occurring.

All these problems are not strictly due to the payday loans, and some of this is just from welfare changes, the loans are a big part of this and they are an increasing problem as shown by the over 40 per cent increase in people seeking advice.

What is even more concerning is that maybe families are not seeking help as they are ashamed or maybe embarrassed with the fact they are struggling and are so deep in debt. So they are not seeking the assistance that they need from StepChange, Citizen’s Advice Bureau or other charity organisations. This is leading to an even more concerning problem with the payday loan cycle. For anyone that is struggling, they should not wait and people need to ask for help right away. There are resources available, including from these agencies that offer debt help.

There is no easy solution to solving this problem, but there are some ways to address it. One other proposal from StepChange, that is supported by many officials and local MPs, is a cap that is tougher than 100 per cent of the loan value. They also want more emphasis on the dangers of these loans, and many MPs would also like to have more focus put on providing free advice to individuals on a low income as soon as they struggle and before they need to turn to a payday lender.