The dangerous cycle of debt: How the House of Lords can do something amazing tomorrow

People often find themselves in a cycle of debt that they can't get out of - and at the moment, it's legal.

Share
Related Topics

Tomorrow, the House of Lords can do something very important for thousands of vulnerable people across country who find themselves fallen on hard times.

Peers will vote on an amendment to the Financial Services Bill which would cap the interest that companies can charge on short term payday loans. I can’t imagine that many of the Lords and Ladies who will vote tomorrow have had much cause to use these financial products. But I urge them with all my heart to support the amendment. Here’s why.

Karen* left school and our foster care at sixteen and worked hard to get a job and support herself. She had struggled at school and had special educational needs, but had made it through and was excited about her first job. One week she found herself a little short. She saw an advert for a payday lender and borrowed £100. When she came to pay it back, the debt took a bigger chunk out of her pay packet, so she borrowed from another lender. Before she knew it she was caught in an unrelenting cycle of debt - borrowing more and more from different lenders to pay back the previous month’s debt. Soon she owed a whole month’s salary. She moved out of her flat to escape the letters and the calls. She was effectively homeless, moving from sofa to sofa. This lifestyle started to affect her performance at work and she almost lost her job.

I stepped in to help her as soon as she told me her predicament. I was shocked at what I found. The companies had sold on the debts. The original loan agreements, amounts and start dates were almost impossible to track - even if I had the money the pay them off I wouldn’t have know who to pay. All the time interest was ticking up. The letters and phone calls were ruthless in their regularity and tone. It must be terrifying to deal with on your own, with no-one to turn to. Fortunately, her bank manager was very helpful and supported us in opening a simple account from which we could pay the money back. I have no idea what Karen would have done without having support around her. There are many people that don’t.

I’ve been working with Movement for Change going into communities to talk to people about the damage that these legal loan sharks can do to vulnerable people. I’ve heard some terrible stories from those affected. With wages stagnating and costs rising, poorer areas in the UK have become fertile breeding grounds for predatory lenders who can make huge profits from desperate people. I know people should take responsibility for their finances. But I have seen how these companies do business. The must be controlled and soon - before they do even more damage.

Tomorrow all eyes are on the House of Lords to see if they will vote to cap interest on payday lending. On Saturday I started a petition on Change.org as a last minute push to show peers the depth of feeling on this issue. I have been amazed by the response. Over 40,000 people have signed and I thank them very much. Karen’s case is now coming to an end, and we are thankful for that. But there are countless others out there on the verge of falling prey to the payday lenders. Let’s hope that peers vote the right way tomorrow.

*Karen's name has been changed to protect her identity

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Tradewind Recruitment: English Teacher

Negotiable: Tradewind Recruitment: This post arises as a result of the need to...

Tradewind Recruitment: Class Teacher Required ASAP In Uminster

£120 - £150 per annum: Tradewind Recruitment: I am recruiting on instruction o...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Ashdown Group: Marketing Executive - Wimbledon, SW London

£24000 - £28000 per annum + benefits: Ashdown Group: Marketing Executive - Wim...

Day In a Page

Read Next
 

I’m not sure I fancy any meal that’s been cooked up by a computer

John Walsh
Labour leader Ed Miliband delivers a speech on his party's plans for the NHS, in Sale, on Tuesday  

Why is Miliband fixating on the NHS when he’d be better off focussing on the wealth gap?

Andreas Whittam Smith
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness