I was asked by a reader if a loan shark can take someone to the small claims court to recover a debt.
If you have not received any credit documents on a loan that you have taken out, you may be a victim of a loan shark. If you call the England Illegal Money Lending Team on 0300 555 2222 they can offer you specialist support.
Loan sharks are illegal and operate without the correct permission from the Financial Conduct Authority (FCA). As these loans can’t legally be enforced, the lender will resort to bullying tactics to enforce repayments. Regardless of whether the lender is licensed or unlicensed, if they are making threats towards you and your family, they are essentially breaking the law.
Some loan sharks may threaten you by saying that if you don’t pay up; you’ll be prosecuted or even sent to prison. The thing to remember is that loan sharks are not beyond the law.
Help and support is available from the England Illegal Money Lending Team, your local Credit Union and your local Citizen’s Advice if you are experiencing financial difficulties or are receiving threats from a money lender.
If you have never received any loan paperwork, and the trader has issued the loan in the course of a business but is unlicensed, then he or she is unlikely to succeed in any court proceedings.
If you receive a Claim Form or what looks like court papers concerning your loan, don’t ignore them, you have a good defence. If you don’t reply within the deadline, then the case will go through unchallenged and you will lose the case.
National Debtline can help you by explaining how to reply to a Claim Form and the timescales for doing this – if you have missed a deadline, they can also explain what to do in that situation.
You can also go to your local Citizens Advice or a Law Centre to ask for help with your defence.
I’ve been talking to Catherine Williams from the England Illegal Money Lending Team about other questions people have previously asked them regarding loan sharks.
How can you spot a loan shark?
Anyone can be a loan shark, whether it’s the chap from down the street or the woman behind the bar at your local pub.
It can also be someone on SnapChat or other social media. You may not be able to tell if a stranger is lying. If you are a student, they may say they too are a student at a different university. The friend they say offered them a loan may not exist, they are the illegal lender.
Loan sharks often appear friendly at first and act as though they’re offering a community service by lending to those in the neighbourhood who may be struggling financially. It may be the case that your neighbour suggested going to the loan shark because they know someone else who borrowed from them when they had an unexpected bill that they couldn’t pay.
Although loan sharks come across as friendly, this behaviour soon changes once monies are owed. Loan sharks have been known to resort to bullying tactics such as threats, intimidation and even violence to enforce repayments.
To check if someone is licensed to lend money, you can check if they are on the FCA’s Consumer Credit Register.
I’ve paid double what I borrowed but he says I still owe more
Sometimes you are told at the start you have to repay twice what you borrowed – this is sometimes called “double bubble”. If you miss a payment, they may say the repayments have now doubled…
Sometimes it is all left vague. Loans sharks rarely provide paperwork on the loans they give out and will often refuse to tell the borrower how much they owe, the period they have to pay it back by and how much interest they are being charged.
This leaves borrowers in the dark about how much they actually owe, resulting in the debts spiralling out of control. You could find yourself paying off your loan several times – or it may never end.
Can I talk to the Illegal Money Lending Team anonymously?
Yes, when calling the England Illegal Money Lending Team on 0300 555 2222 to report a loan shark, your call will be dealt with confidentially by one of the team’s trained officers. You can give your name or remain anonymous when making a report.
If you fill out the contact form at Stop Loan Sharks, they will call you back at a time, day or night, which you choose.
You can also talk about your situation on their webchat if you don’t want to use the phone because you don’t want your children or anyone else to hear.
Or text them on 078600 22116 or email the team at firstname.lastname@example.org.
The Illegal Money Lending team will support you all the way. You will get a dedicated Liaise Officer who will be able to answer your questions and deal with your concerns.
Your safety is their top priority, you don’t have to make a statement for the police if you don’t want to.
Here is a video on what happens:
Nationally, the Illegal Money Lending Team have secured more than 368 prosecutions for illegal money lending and related activity, leading to nearly 318 years of custodial sentences. They have written off over £71 million worth of illegal debt and helped over 26,000 victims.
In the following video, Mike tells what happened in the years after he borrowed from a loan shark and how it ended: