We have a crisis and it's called payday loans. At Hoyes Michalos we believe payday loans are a real problem because all too often they create a vicious cycle of debt. We also don't believe that recent efforts by the Ontario Government have been enough to deal with the hidden truth behind payday loans: already indebted Ontarians are borrowing multiple payday loans, from multiple payday lenders at the same time, and this is contributing to a record rate of payday loan induced insolvencies.

How we know this is because every two years we analyze data from actual insolvencies to find out why someone files insolvency. We call this our Joe Debtor study. Part of our study includes a detailed dig into payday loan use by Joe Debtor so that we can isolate the behaviour and profile of the average insolvent payday loan user.

Our data points to four startling findings:

1. 1 in 4 insolvent debtors had at least one payday loan at the time they filed a bankruptcy or consumer proposal.
2. The average insolvent payday loan borrower has 3.4 payday loans with total outstanding balances of $2,997.
3. Payday loans make up 9% of borrower's total unsecured debt of $34,255
4. An insolvent debtor with payday loans owes 121% of their MONTHLY take home pay in payday loans.

Full details on the show with Doug Hoyes and Ted Michalos.