A loan shark is making me feel unsafe in my own home: Karen’s story

As the cost of everyday essentials continues to rise, more and more people are approaching illegal, unregulated lenders to cover basics like household bills and food. More than three million people in Britain have been forced to turn to loan sharks in the past year, according to research from the responsible lender Creditspring. One in six borrowers knew they were dealing with a loan shark but felt they had no other option after being denied credit by legitimate lenders.

The real number of people in debt to loan sharks could be even higher, as many are too frightened or ashamed to come forward, and illegal lenders don’t report their activities, making it difficult to gather accurate data.

How loan sharks prey on the vulnerable

Borrowing from illegal lenders is dangerous. Loan sharks often use threats or intimidation against those who fall behind on their payments. They prey on vulnerable individuals by promising quick cash with no paperwork, making it seem like an easy solution. These lenders can be acquaintances, a ‘friend of a friend’, or someone in the local community who is known for lending money.

What is Stop the Loan Sharks?

The Illegal Money Lending Team (IMLT), also known as Stop the Loan Sharks, was set up in 2004 to investigate illegal lending practices. Initially launched as a pilot scheme in Birmingham, the scheme's success led to government backing. Since its launch, the IMTL has supported over 31,000 people and written off over £91.3m worth of illegal debt. Over the past six years, the team has carried out 263 operations and arrested 327 loan sharks, with the North West region seeing particularly high levels of illegal lending. In January 2024 alone, 75% of IMLT’s operations took place in that area.

This year marks the 20th anniversary of Stop the Loan Sharks. 2024 has seen two landmark cases already, including one of the longest sentences handed to a loan shark, and one of the highest amounts confiscated from an illegal lender. To reach out to communities which may not speak much English and are therefore a target for these predatory lenders, the IMLT has distributed leaflets in 20 different languages.

The organisation held its annual ‘Stop the Loan Shark Week’ in May. Partnering with around 520 organisations, the event aims to raise awareness about loan sharking and help victims regain financial control. This year’s theme, ‘No Blame, No Shame’ stresses how those who borrow from loan sharks should not feel guilty or embarrassed.  

Today (18 September), Stop the Loan Sharks is celebrating its anniversary with an event focusing on what can be done to eliminate the harmful practice of loan sharking once and for all.

To bring attention to this important issue, we’re sharing Karen’s story, a reminder that there is help available, even in the most difficult of situations.

Karen’s story

In October 2023, Karen* and her partner, who had been living in a homeless shelter, moved into an unfurnished home in Oxfordshire. At that point, Karen was already £13,500 in debt as she was being charged council tax on a property she hadn’t lived in since 2018.

Without the financial means to furnish her new home, Karen felt desperate and reached out to a loan shark.

The lender, a friend of a friend, offered her £1,000 in cash. She was told she’d need to pay back £2,500 over six months. No paperwork was signed, and there were no affordability checks. Karen’s friend who knew the lender even collected the cash on her behalf, meaning Karen was initially unaware that she had entered a risky agreement.

It didn’t take long for her to realise something was wrong, though. The loan shark began adding more interest, causing her monthly payments to soar to £600. By November, she will have repaid a staggering £8,400, far more than both the original £1,000 loan and the £2,500 she initially agreed to.

Karen’s situation is made even more difficult by her battle with stage 2 cancer, which has required intensive chemotherapy. Her health struggles, along with the immense financial stress, have taken a serious toll on her mental health. She’s now on antidepressants and lives in constant worry.

She confided the loan shark had threatened her saying, if they didn’t get their money, they would “pay a visit to our place and it wouldn’t be very nice”.

Karen has been frightened about answering the door, although things have improved slightly since they installed an intercom. “If I don’t know who it is, or I’m not expecting anyone, I don’t answer the door,” she said.

“If we didn’t pay the loan back, I’d feel very threatened in my own home,” Karen admitted.

How we helped Karen?

When Karen reached out to us, she was overwhelmed and desperate. We recommended she report the illegal money lending, and she has followed through with this advice. While reporting a loan shark can be daunting, it can help prevent others from experiencing similar suffering, and make communities safer.

We also began exploring whether a debt relief order (DRO) would be a suitable option to help Karen deal with her other debts. A DRO freezes debts for 12 months, and if your situation doesn’t improve by the end of that period, your debts are written off.

Karen revealed that waiting to find out if her DRO had been approved consumed her thoughts “day and night”. When the approval finally came through, she was overcome with relief. "When I saw it had been approved, I could have hit the roof and come back down,” she said.

She has since vowed never to turn to a loan shark again and has warned her twin sister to avoid illegal lenders at all costs.

Karen's story is a powerful reminder that no one should face this kind of exploitation alone. There is help available, and with the right support, even the most desperate situations can be improved.

For more information about red flags to look out for when borrowing money, where to get advice on illegal money lenders, alternatives to loan sharks and how to report them, check out our loan shark guide.

*Some personal details have been changed to protect our customer’s privacy