Two years ago, Mary (not her real name) was walking with a friend near her home in Liverpool. She had just moved into a new, rented property with her two daughters and, although she was a single parent with no job, was feeling confident about the future.
But a chance meeting that day led the 44-year-old into 18 months of fear and misery from which she has only just escaped. "We met this man, who my friend then borrowed some money from," Mary recalls. "It seemed easy and he was very friendly. Because I had just moved into my new place I needed loads of stuff, so popped round to see him a few days later and borrowers £200. I used the money to get some essentials, such as duvets and saucepans."
But Mary's trouble began almost straight away. Even though the man had told her she could start making repayments a week later, he turned up on her doorstep within three days to demand cash. That was just the beginning of her nightmare.
The loan shark's visits became more frequent and he demanded more money each time. Then things began to escalate. When Mary told him she had no money to repay him when he made one of his regular visits, he told her she would need to take another loan to repay him. His tone suggested that she had no alternative. He did the same a couple of months later. Pretty soon she was even further in debt, and things were getting worse.
"I ended up having to pay him £80 a week, and it came to the point when I had to go without food so I could afford to pay him. I was petrified. By the time he told me that I owed him £800, I knew I had to escape," Mary told The Independent.
She found a new home on the other side of Liverpool through the Riverside Group housing association. She managed to scrape together the amount she owed the loan shark by borrowing from a close friend, put it all in an envelope and handed it over on the day she left. That was six months ago and she has never dared return to the area. "If I go past the area on the bus, I shake and am frightened he may spot me and come after me for more money. I will never ever borrow from a loan shark again."
Mary's money worries are not over, but she has sorted out a loan through My Home Finance, a social enterprise that arranges affordable lending to people who have been turned down for mainstream credit. To highlight the dangers of illegal lenders, it has launched a Be Shark Aware campaign.
Tess Pendle, the boss of My Home Finance, said: "We need to tell struggling people that there are alternatives to loan sharks. Housing associations, local authorities and other charitable organisations can all help out people in debt."
The organisation's research shows that in 19 out of 20 cases, people are introduced to loan sharks by family or friends. "The 'helping out a friend' [ploy] is a very manipulative and deceitful way of gaining people's trust when they are at their most vulnerable," warned Ms Pendle.
Find out more about the Be Shark Aware campaign at myhomefinance.org.uk or go to findingfinance.org.uk which is a directory of similar social enterprises.
Charities attack payday lenders
Payday lenders were back in the spotlight this week when they claimed that a regulatory crackdown on some of their practices was forcing borrowers into the arms of illegal loan sharks.
The Consumer Finance Association, which is paid to promote high-cost credit firms, said: "Borrowers are being excluded from credit and concerns are growing for how they are filling the gap in their finances."
But debt campaigners and charities hit back at the claim. "There is no evidence that illegal loan sharking is on the rise and it is dishonest to pretend otherwise," said Carl Packman, author of a book on payday loans. "The CFA would rather have less attention on its members. It is more profitable for them that way, but we shouldn't stand for it. Protecting consumers by tackling loan sharks and regulating payday lenders should not be mutually exclusive."
Debt charities accused payday lenders of doing too little to help people in debt. Peter Tutton, head of policy at StepChange, said the proportion of its clients with payday loans among problem debts had fallen from 24 per cent a year ago to 16 per cent now, mainly because of the impact of regulation.
"Steps taken by the Financial Conduct Authority are starting to clean up problems in the payday loan market, but we are concerned about the affordability and sustainability of some of this lending," said Mr Tutton. "We need alternatives to high-cost credit that will help people get through difficulty."
Gillian Guy, the chief executive of the independent charity Citizens Advice, said: "High-cost credit is not the answer to financial difficulties. There is a need for more responsive short-term credit options. But it is also crucial that banks and creditors direct people towards free debt and money advice, especially when borrowing is not a suitable option for them."