This client was a working professional who became reliant on payday loans during a difficult financial period.
Overview
Challenges
Although her total debt was not excessive, the extremely high interest rates associated with payday loans created a cycle she could not escape.
Each pay period was largely consumed by interest payments, forcing her to take out additional loans just to keep up. This cycle escalated quickly, putting her at risk of falling behind on essential obligations, including her mortgage.
Her income level made bankruptcy in Canada less suitable, yet she had no realistic way to repay the debt under existing conditions.
What we did
We structured and filed a Consumer Proposal at approximately 50% of the total payday loan value, while also including her other unsecured debts.
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Her proposal was accepted and provided immediate relief:
- Reduced total debt by approximately 50%
- Reduced monthly payments by approximately 80%
- Eliminated payday loan balances and associated fees
- Broke the cycle of compounding interest
- Stabilized her financial situation and protected essential expenses