Oh, there are multiple problems.
Starting out at the lenders’ end, they’re charging usurious rates, preying on people who have no other options but to pay those rates, or misleading them. Like payday lenders - sure, you can borrow $200 for $20, and pay us back with the next paycheck, but if you still need that $200 to tide you over to the next paycheck, it’s going to cost you a lot more than $20. Consider that with a credit card with a bad annual rate (~30%), you’d only be paying ~$5 on that $200 each month.
Next, there often isn’t a good-faith attempt to collect the money owed; at the first sign of non-payment, the debt gets sold off to a collection agency for pennies on the dollar. So, for that $200, this is your fourth paycheck, and you’ve already paid the payday lender $225 for that $200 you keep passing back and forth. Now, for the same reasons you couldn’t get by without the $200 in the first place, you’re unable to pay the lender back. Instead of trying to set up a payment plan, they add a huge fee to it for non-payment, and then sell it for the new cost ($300) to a collection agency for $10.
The collection agency now “owns” the full value of the debt, though they’ve only spent a fraction of its value to get it. The agency doesn’t bother to check if this is a valid debt; your debt could have been the result of a computer glitch, or a misfiled paper, or outright fraud. They don’t care: they own the debt, and they want it paid. So, going back to our payday lender, you’ve already overpaid the amount of money that you borrowed in interest, but you manage to scrape the money together and, and paid it back again, but a week after it was due, and had already gone to collections. Collections doesn’t care who you’ve paid or what - they paid $10 in good money for $300 in debt, and they want it now. You refuse, so they sue you.
You end up in a courtroom, having to spend money that you don’t have on transport, on child care, and are losing more money because you couldn’t show up for work today. At this point, you’re understandably pissed off because of the whole process. You don’t have a lawyer to advise you to keep your mouth shut, and, even though a lawyer would have been able to prove that you didn’t owe a dime, you say the wrong thing, or the right thing in the wrong way, or maybe you’re consumed by the frustration at this whole process and burst out in a string of expletives. The judge then garnishes your salary, and now you’re even closer to the brink of starvation.
You try to scrape by, but the rent’s coming due, and, what with your paycheck being smaller than it should, you’re $200 short, so you stop by a different payday lender…
It’s not the concept of “people need to pay back what they’ve borrowed” that’s broken. The broken part is that the entire lending industry is engaged in a systemic and morally outrageous attempt to squeeze every last cent they can from the people who are least able to afford it. They get trapped in a vicious cycle that they can’t escape, and when they fail to pay that money back (which is the end result that the system is designed to drive them to), then people shrug off their plight and ask, “Do some people get a pass on paying back money they borrowed?”
