Loan shark debt. What to do if you owe money to an illegal lender.

How do I know someone is a loan shark?

Not every friend who lends you money is a loan shark. Loan sharks are people who make money off their loans. Here are some warning signs:

• The person wants interest but gives you no paperwork. Loan paperwork should include the overall cost of the loan, a complaints procedure, and Ombudsman details
• They refuse to give you information about the loan. This includes any interest, when they want to be paid back, and what happens if you do not pay on time
• They want to keep something of yours until the debt is paid. Things like your mobile phone, passport, or cash card
• They take things from you if you do not pay on time
• They keep adding interest or charges, so the debt never goes down
• They can scare you or be violent when you do not pay

Not all loan sharks act like this.

Some pretend to be doorstep lenders which are a real, FCA authorised way to borrow money.

They may even give you a payment book or an agreement to sign.

• Make sure the FCA allows them to lend money
• They are probably a loan shark if not

Ask for help if you think you may be the victim of a loan shark

Loan Sharks often target newcomers to the UK as they may not speak much English and are more vulnerable. Stop Loan Sharks now offer a translation service in 20 different languages for those affected to get support.

Is it a bad idea to borrow from a loan shark?

Borrowing from a loan shark has many risks.

• There can be high and unmanageable interest rates - loan sharks charge much higher interest than high street lenders
• They may talk about ‘double bubble’, but it is really a lot more
• You may be threatened for not paying on time. This can include being followed or bullied
• Things can become violent
• You may need to borrow more money to pay back your first loan. This gives the loan shark more ‘power’ over you
• They may ask you to do things for them in return
• They may increase their threats and violence

Loan sharks use many tactics to gain your trust.

• They may be friendly when you first meet them
• They may act like they understand your problems
• They may switch between scary and nice to keep you on your toes

What can I do about a loan shark debt?

They may try to scare you, but a loan shark debt is not your fault. Remember:

• You have done nothing wrong
• You are not a criminal
• You will not be in trouble for getting help
• The loan shark is committing a crime, not you
• You do not have to pay the money back
• A loan shark has no legal right to collect money that was lent illegally
• Do not stop paying a loan shark if you are worried about your safety
• Get advice from a specialist before you make a decision

Specialist illegal money lending teams can:

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• Give you confidential help
• Investigate your lenders
• Prosecute illegal lenders

Can a loan shark take you to court?

Loan sharks cannot take you to court for money. It was illegal for them to lend it to you.

What happens if you do not pay back a loan shark?

Owing money to a loan shark can be scary, but you are not alone. Help is available 24 hours a day.

The teams below will listen to your situation, offer guidance and support and maybe even stop the loan shark. You can speak to them anonymously:

• England Illegal Money Lending Team – 0300 555 2222
• Wales Illegal Money Lending Team – 0300 123 3311
• Scotland Illegal Money Lending Team – 0141 2876 655

There is no dedicated Illegal Money Lending Team in Northern Ireland, but you can contact PSNI, give them information and ask for guidance on your options.

Is a short-term loan right for you?

Short term loans include:

• Buy now pay later
• Payday loans
• Doorstep loans

These can seem convenient if you need money fast, but they are an expensive way to borrow and can leave you worse off financially. Make sure you can afford to repay the full amount, including the interest, and think about what might happen if you fall behind with payments.

We might be able to help if you feel you need high-interest credit to cover your basics. There are cheaper ways of borrowing, including arranged overdrafts and credit unions.

You may be able to get support from a trust fund or your local council if you are on a low income and need emergency help with money.

How can I tell if a company is authorised to lend money?

It can be hard to tell someone is lending money illegally, especially if they act like a normal business or seem like your friend.

Call the Financial Conduct Authority (FCA) helpline to find out if a business has a valid authorisation.

• 0800 111 6768
• You can also check the FCA register yourself

Have the payment book or any agreement with an address or licence number on it when you call.

Sometimes a business may have authorisation for other financial activities, but not lending. They are breaking the law if they lend or collect money.

Report a loan shark

You can report a loan shark anonymously.

• Report a loan shark in England
• Find out how to report a loan shark in the rest of the UK

Are there alternatives to borrowing from a loan shark?

There are safer ways to access money or cover expenses even if you are on a low income or have a poor credit rating. They include:

1. Help from the government, including:

• Benefits
• Money to cover food and emergency costs
• The government website has information on how to get an advance on your first benefit payment
• You can also get advice on your options from Jobcentre Plus

2. Credit unions help you save money and offer manageable credit products

• There is likely to be a credit union in your local area
• They consider credit applications from people with poor credit ratings

3. Lending schemes through your employer

• Talk to your HR department
• Ask if they can offer any short-term assistance, such as an advance on your wages, or overtime

4. Assistance with your utilities

• Many utility providers can help if you are struggling with gas or electric arrears
• The Winter Fuel Payment scheme can help through colder months if you qualify

We can help

We will not judge you if you think you borrowed from a loan shark. Everything you tell us is confidential. Use our online debt advice to get started.