A proposal designed to limit the number of payday loans a Utah resident may obtain has been torpedoed in the state Legislature.

House Bill 113 (Daw) was defeated in the House Business and Labor Committee by a 9-4 vote. The bill would have mandated the creation of a state database of those who have an outstanding payday loan and those in default on a payday loan. Those on the list would have been disqualified from receiving additional short-term loans.

A spokesperson for the state's payday loan industry successfully argued the majority of payday customers repay the loan promptly and avoid getting caught in a "debt spiral." It was also agrued Utah payday lenders allow customers to make long-term, interest-free payments to pay off their debt.

Utah law allows payday loans to be rolled over for a maximum of 10 weeks. At that time the payday lender must put a stop to the interest build-up. State residents may, however, continue to apply for additional loans.