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The Importance of Payday Loans in Canadian Consumer Insolvency

by Ruth E. Berry and Karen A. Duncan

October 31, 2007


"The research will provide an analysis of the role that payday loans play in consumer insolvencies, both summary administration bankruptcies and Division II proposals in Canada. There seem to be two schools of thought about these loans–either they are usurious and the least knowledgeable, vulnerable consumer will fall prey to them, or they are a rational answer for consumers with few assets and few alternatives to use at a time of great need. Currently there is no research in Canada to determine the importance of payday loans in consumer insolvencies, although a recent study (Mayer, 2004) has considered the role of these loans in selected US counties. This research is inspired by Mayer's study using a sample of filings of both consumer bankruptcies and Division II proposals from seven major Canadian cities."

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