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

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

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next
 

Riyadh is setting itself up as region’s policeman

Lina Khatib
Ed Miliband and David Cameron  

Cameron and Miliband should have faith in their bolder policies

Ian Birrell
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor