When Loan Sharks Attack

I was one of Randell Tiongson’s guests in his Money Talks radio show last night on Energy FM. In our discussion we talked about Filipinos getting buried in debt and eventually resorting to looking for opportunities overseas and leaving their loved ones behind.

I remember falling victim, a willing one at that, to a loan shark about 10 years ago. I couldn’t eat well. I could barely sleep for more than a couple of hours every night. I only worry about what could happen if they come to our house and do something terribly unlikeable. I could have even lost my job.

I recently read a news headline in Ireland that says Soldier stole money from car park to pay back loan sharks“. AN OUT-of-work soldier came under pressure from loan sharks to repay a debt when he stole nearly €1,000 from a car park office safe, a court heard.

And then just recently (September 1, 2014), “Two teachers and a collector were killed, while four other teachers were injured, after a police officer went on a shooting rampage in the Pangasinan National High School campus in Lingayen town, Pangasinan Monday afternoon.

Getting buried in debt, especially if the money is borrowed from loan sharks, is just really disturbing and even life-threatening.

What is a Loan Shark?

A loan shark is a person or entity that charges borrowers interest above an established legal rate.

In the Philippines, there are what we call, with racially-offensive taste, the bumbays who offer 5/6 or persons who lend money and charge 20% interest that compound on a monthly basis.

loan shark

And then there are those who charge even more than the Bumbays and they would really kill borrowers who would hide and won’t pay on time. Yes, they are just around the neighborhood.

By Philippine law (Circular 799 of the Bangko Sentral ng Pilipinas), the legal rate of interest on loans without express contracts should not be more than 6% per annum. But this apply only to banks and other legal financial institutions. Anyone charging more than this is definitely illegal and can be tagged as a loan shark. Some of them can even charge over 100% interest.

A friend has actually borrowed P5,000 from a loan shark and agreed to repay the amount with P10,000 within 60 days!

Beware of Loans Sharks!

If you intend to borrow money from a loan shark, be warned that the money they lend to you will always be backed with either threats of damage to your reputation or even violence so that you can repay the loan.

Should you find yourself in such a position of owing to a loan shark, it’s best to talk to a trusted lawyer or a financial advisor to educate you and help you get out of this crisis.

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Photo credit: Nick

11 thoughts on “When Loan Sharks Attack”

  1. Hi, I have this current debt with a friend who lends money with 3% interest rate monthly, I have been borrowing from him since 2015. But recently, my work is on and off, and my family is in financial crisis, which pissed him off because my payment is always delay. So now he demands penalty 550 every time I cannot pay on the set date or even my payment is not exact, my payment is on 15th and 30th of the month. I did not track my payment since I trusted him. But instead of my debt should be decreasing, the last time I ask him my total balance, it increased into 2,000 pesos. I think this is too much. I’m afraid to confront him because he might post me on facebook and it will cause a big scandal to me. Please advise me what to do.

    1. Hi Tinz, my advise is to approach the lender diplomatically. Set a meeting with him personally and make sure you have a common friend who will mediate your discussion. Negotiate to reduce the penalty and if possible, totally remove the total penalties and start over again. Monitor your payments and make sure that you and the lender have the same totals as of the meeting.

      Tell the truth about your financial capacity to pay off your debt. But then again, watch your spending habits. And make sure you don’t post anything that will get the attention of the lender.

  2. Hi, what legal action kaya to take sa case ko. Nagloan ako sa isang lending company (nakita ko lang ad nila in Facebook). They have a 1% interest per day. After 15 days, I availed for a prolongation in which I need to pay an interest which is 30% of my principal loan. Note that 30% is for 1 month only. Days after, I fully settled my loan. However, come the actual due date nung supposedly payment ko they are asking me for a 700 penalty and another 1% interest per day ng loan. I told them that I already settled my loan ahead of my due date so dapat wala na ko babayaran. It turned out na may fee ang prolongation which is 700 and nag i-incurred na ng interest which is 1% per day. And it’s my fault pa kasi binayaran ko yung loan ko in advanced. What action should I take para di nila ko singilin? And can I report this company to the authorities ? Thank you po sa pagsagot.

  3. I have owed a friend with the agreement that I will pay her 10% interest/month, since i badly needed the money to process my daughters paper as exchange student, i grabbed it and promised to pay it in four months because my daughters coordinator told us that the money that we will used for her education will be refunded right away as soon as she fly abroad. But to our dismay it never materialized even worse that we shouldered all her expenses abroad, which was the reason that we have never paid the loaned money. I have already made payment almost 30k and ask her to give us more time and to cut the interest because the principal amount as she has told us were still the same because the payment i made inly covered the interest. She threathened me that she will report me to my office if i could not provide her the full amount of 100k in a month. What shall i do? Its really taking its toll to my health and sanity, being paranoid of the scandal it would make of the news will spread.

    1. Hello, have you kept the receipt you paid? Because you can go to a lawyer, and ask him/her to come up with a proposal on how you will pay your loan according to your ability. Their interest rate is illegal, and the court will never acknowledge the 10% interest. Also, ask your lawyer to put on the proposal to stop harassing you or your family since you have intention of paying your debt.

  4. Thanks for the advise and looking on my plight. They have harrassed me infront of my house just this March and even humiliated me infront of my superiors in the office telling them that i am indebted badly though we already have an agreement in the barangay that I will pay them monthly which I complied religously up to this date. Can I file a complaint, her hisband even looking at me with contempt whenever they are in the office.?

  5. -hi i have a loan to this lender they have a 40% para sa hiram mo. Nakalagay sa agreement n pede ko extend ung loan ko as long I paid 40% monthly for the extension, pumayag n nga ako n ok lng na mgbayd ng 4k monthly to extend my debt. Pero palagi ako binabastos ng mga agent nila sa phone, tinatakot, pinipilit na mgbayad ng buo hnd ko pa nmn kaya mgbabayad nmn ako.. I just need time..

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