Case study: Stroud man borrowed £700 from a loan shark

Police estimate that one in five households in parts of Gloucestershire have borrowed money from an unlicenced money lender.

This is the story of Chris in Stroud who ran away from a loan shark after failing to make the repayments when living in London a number of years ago.

He said the following:

I’d been in debt with conventional lenders. I’d taken a leap of faith and left a PAYE job and was training as a student.

Debt was building up and I found that I was owing money on the money I’d borrowed to pay off other money.

That’s how the desperation came about.

I was getting letters through the post and hiding them from the partner – trying to cushion her from it.

I saw a respectable-looking advert. I didn’t know it was for a loan shark.

I phoned the number and met two people who came to the house. A man and lady appeared – very ok, straight down the middle, people.

‘Very uncomfortable’

‘We want to help if we can’ – I remember that, really clearly. Which at that time was music to me because I was in a state.

That all changed in a matter of weeks.

I can’t remember the exact amount of interest that was quoted but it was way above what I was paying for the well-known credit cards.

We agreed a fortnightly call. I can only think that this is aimed at people on benefits where a lot of people get paid fortnightly.

The first occasion I couldn’t pay the full amount there was no threat of anything but I was made to feel very uncomfortable and told a ‘line manager’ might have to call.

The first short payment they wouldn’t accept. They would only accept full payment.

‘Signed an agreement’

Somebody else turned up on his own and the whole complexion of the thing changed completely. There was inference that they might have to call in my partner and I was made to feel very uncomfortable very quickly.

I did manage to make a payment.

I approached them and said this payment amount is going to be difficult for me to meet at the moment, can we re-arrange? They said we couldn’t because I’d signed an agreement.

Looking back on it I think that they’d built up a profile of my domestic situation.

What’s going to happen next? Who’s going to get involved? Who’s going to come knocking? When are they going to knock? Who are they going to call? It was very uncomfortable.

I got quite ill over it. I had stomach problems. Ulcer-like symptoms. I was drinking and using recreational drugs, which is part of the reason I was in a state.

‘I needed money’

Things got worse. It wasn’t just this organisation, I was involved with other people as well. This was the only unlicensed lender.

Two years later I got involved with the Citizens Advice Bureau – and I’d advise anyone to do that – and I sat down with a debt advisor.

Of the £700 I borrowed, I paid back over £1100. I still owe them a lot. I’d imagine I owe them about the same again because the interest is compounded.

I moved. Letters were written.

Having to find somewhere else to live was difficult because my credit rating was non-existent and I had to find somewhere without anyone knowing.

Looking at it with hindsight it just seemed completely unregulated and there was no clarity to it.

But then I didn’t want clarity, I needed money.

Source: bbc.co.uk