Payday Loans Still Not Ended – And Now Its Victims Are Once Again Wrong | The independent

Another day, another payday lender comes out of the grave to bite his borrowers.

The directors of Payday advance, which went bankrupt in February, began contacting thousands of former clients who were due to be compensated through badly sold loans by the company to entice them to join a growing list of creditors.

Existing borrowers will be OK if their outstanding debt is less than the relief owed to them. Their balances will simply be reduced so that they have less to repay. But those who have settled their accounts are not so lucky.

The admins tell me that there will be money for them, so it is in their best interest to respond to text messages and emails that have been sent. But they will not be paid what is owed to them due to their scam. They have the status of unsecured creditors. This means that they are at the back of the pack when it comes to dividing up what is left of the company’s money.

Compared to Wonga, WageDay was more of a piranha fish than a shark – but the problems he created weren’t that different.

In the heyday of the payday loan industry, they both loaned money indiscriminately and then applied the screws to people who couldn’t afford to repay. In many cases, these people ended up paying off one short term loan with another and then another. As a result, their debts skyrocketed and they drowned.

I have already described industry practices as tantamount to a legalized loan shark. No, borrowers have not been bullied, but consider the impact on the health of people in this outrageous position. Imagine what it must be like to see the red bills, threat letters and the latest demands piling up on the doormat. Then ask yourself what is the difference between the way some payday lenders operate and the tactics employed by Nobby Knuckleduster, an affiliate of Backstreet Loans Unincorporated.

The growing scandal has led the Financial Conduct Authority (FCA) to impose a crackdown, capping interest rates and fees. He also ordered lenders to compensate abused borrowers as complaints flooded in. As a result, Wonga collapsed last August. WageDay went bankrupt in February when its owner Curo Transatlantic, who also operated Juo Loans, called in the directors. They can still be joined by others.

Hell is paved with good intentions and the FCA’s intentions with its compensation claim were good. The problem is, while the compensation system is there to ensure that savers are covered if their suppliers go bankrupt, it does not cover borrowers. It is a loophole in the system that has led many aggrieved WageDay and Wonga customers to experience a false dawn. They have every reason to be very bitter; they have slipped through the cracks.

As for payday loans more generally, they will unfortunately survive this blow. The industry is now much smaller than it used to be, and that’s a good thing. The arrival of Wonga and his imitators sparked an easy short-term credit boom. Thousands of people who would not have dreamed of taking out payday loans before he arrived have been sucked up and beaten in a painful place. Running out of cash when you’re after a night out on the town? We can help! It’s easy money! You can worry about refunds later (and worry, once we get our claws in you).

It should also be a better regulated industry. But was he punished? I am not sure.

I recently started filling out a form for a payday loan as part of the search for a coin. My interest was to compare chargers between this form of credit and others, but to get a quote I would have had to provide my bank details. At that point, I gave up.

Five minutes later I got a call on my cell phone from a friendly but arrogant salesperson extolling the virtues of the company I had chosen and asking me what they could do to help me join HappyClappyPaydayloans .com. Regulators should take note.

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