Loan shark warning from debt advisors

PEOPLE facing financial hardship are being warned that resorting to "loan sharks" will almost certainly compound their difficulties.

Siobhan Harding from the Citizens Advice Bureau (CAB) says some people are still being tempted to take loans from unscrupulous individuals which often leads to "priority" debts going unpaid.

"The problem with this kind of lending is that the interest rates can be very high and, because they often put the most pressure on, you find that people try to pay these people off instead of paying their priority debts which are mortgages and things like rates. These debts can have serious implications for people if they’re not paid," she said.

During the last financial year, CAB helped over 2,500 clients with over £33 million of debt. This is an increase of seven per cent on the previous year and continues a four year upward trend since the service began.

The debt expert added: "These loan sharks are usually local so they can call at your door and can really be quite persistent.

"We help people prioritise their debts but one of the problems with this type of debt is that people don’t always disclose it to us. There is an additional kind of stigma attached to it, especially if it’s connected to paramilitaries or whatever."

East Belfast MLA Robin Newton says he is "gravely concerned" by the number of constituents who have been made redundant and resorted to loan sharks – some of them charging over 100 per cent interest rates.

The DUP representative is also advising people to seek professional help rather than take extreme options.

"One thing they must not do is to borrow more money to repay the original debt. Especially, they must not have a loan from the loan sharks with their despicable and immoral interest rates."

He added: "Though I am only seeing the tip of this debt iceberg, I recognise that there will be many people over the coming days who will have major concerns about how they are going to get through the Christmas period.

"Many will get themselves into a state of constant worry and despair with the potential of putting themselves into ill health or even worse."

Siobhan Harding said: "Our general advice to people is to work out how much you’ve got to spend and stick to it, and not to get dragged into impulse buying.

"It’s easier to manage people’s expectations if you explain to them that with the recession you can’t stretch to a huge present."

Source: newsletter.co.uk