Vancouver family warns of payday loan risks after son racks up $45,000 debt

A Vancouver family continues to face the repercussions of high-interest payday loans after their vulnerable son fell into more than $45,000 of debt in the span of months.

In 2018, Erlene Woollard’s adult son, Kevin — who has a developmental disability — was living on his own in an apartment subsidized by his parents and had a steady job working at a brewery making about $15,000 per year.

“He had always managed with a bit of our help and support,” Woollard told CityNews. “It was always really important to us that he’d go through life with self-determination and agency.”

Erlene Woollard says her developmentally-challenged son, Kevin (pictured), fell into more than $45,000 of debt after falling victim to predatory lenders. (Supplied)

Part of that self-determination, Woollard says, included Kevin finding a romantic partner.

“He had always wanted a special person in his life,” Woollard told CityNews. “When he met her, he dropped everything for her and surprised us at times how beholden he became of her.”

Woollard says that Kevin would have done anything to please his new girlfriend.

“She, of course, wanted attention, and he wanted to be able to provide that attention, and that included material things,” she said.

About a year into their relationship, Woollard says Kevin became more agitated. She says he had been acting out at work and was at risk of losing his job.

“We knew something was up,” she said.

After checking in with some of his coworkers, Woollard says her family learned that Kevin had turned to high-interest payday loans to help pay for gifts and experiences for his new partner. At first, she thought the situation was manageable.

“I thought that we could just solve the problem by paying off what then seemed like a lot of money — which was $7,000 — and then that would be a lesson learned and he could go on with his life,” Woollard explained.

But after compiling a list of his debts, it was discovered that Kevin owed more than $45,000 to various lenders.

‘It was so outside our own life’

Woollard says much of the money that her son had owed was in interest, with rates of over 40 per cent, along with additional fees from his bank and the lenders.

“He wanted to solve the problem himself. He had a certain amount of agency and confidence that he could at first, and of course it just got away from him. And he actually had no idea at that point how much he owed,” she said.

It’s Woollard’s belief that Kevin was targeted by predatory lenders that saw an opportunity.

“He was just desperate because he wanted to live a normal life, and these ads kept popping up on a phone that someone had given him. And so it looked easy, it looked welcoming … but he didn’t have the capacity to look at it and realize how high the interest was,” she explained.

“If a person is desperate and/or wants to live the life that they see other people living, and they go to these people, then they turn over all of their rights, really. These people can look at his bank account … He had to give them access to his bank account.”

Once the extent of Kevin’s financial troubles became apparent, Woollard and her family decided they needed help.

“It was so outside [of] our own life and way of being in the world,” she said.

Payday loan debt takes toll financially, emotionally

The situation that Woollard’s family experienced is not uncommon, according to someone who helps people get out of debt.

“Oftentimes, people who fall victim to predatory loans are people who don’t have the option of getting more affordable loans, say from a traditional bank or a credit union,” explained Murray Baker, manager of financial services at Family Services Greater Vancouver.

Erlene Woollard says her developmentally-challenged son Kevin (pictured right) fell more than $45,000 in debt after falling victim to predatory lenders. (Supplied)

Once someone gets caught up in these types of situations, Baker tells CityNews it’s very difficult to recover.

“You can see when you’re paying that high of interest, it’s next to impossible to get out of a downward debt spiral,” he explained. “You’re trying to pay off one, you’re taking out another one, then you’re trying to pay off both.”

He says people will turn to high-interest lenders because they are often the only places that will lend.

“The type of people that we see taking out payday loans aren’t taking out these loans to buy these luxurious or trivial items. We see people take out these payday loans because they’re really stuck. They may be unemployed, they may just be struggling in this high inflation environment,” he explained.

“Really, the only place they have to go are these payday lenders who welcome them with open arms, but of course, with a very high-interest rate attached.”

While the financial impact on people may be obvious, Baker says getting caught up with predatory lenders can also take an emotional toll.

“Mental health, relationship, and family conflict, impact on work performance, and even addiction issues can be triggered by the stress of struggling to pay off the loans. With the high-interest loans it’s the feeling of hopelessness that comes with a person feeling that they will never escape the predatory lending debt trap,” he said.

Baker met with Woollard and Kevin in 2019 to help address his debts, developing a five-year-long repayment plan.

More people turning to payday loans

Over the past year or so, Baker says he’s seen more cases of people who have been wrapped up in high-interest loans, as the cost of living continues to rise.

“People are struggling. You need to pay your rent, you need to put food on the table for your families, so people are turning to them because sadly, there’s nowhere else to turn,” he explained.

The lack of options, Baker says, is something that needs to be addressed. He suggests banks and financial institutions should offer fast loans for people who need them, where interest rates are around 20 per cent, instead of upwards of 40 per cent.

The federal government also appears to be taking steps to address the issue. In the 2023 budget, the government announced its intention to cap interest rates on consumers at 35 per cent, while also requiring payday lenders to charge no more than $14 per $100 borrowed.

For Woollard, she hopes her family’s story can serve as a learning experience for people.

“It is very expensive to be poor,” she said. “One of my goals is for us as a society to look at our unconscious hidden biases. Because we do have biases against the poor … or people with disabilities.”