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Last Updated: Thursday, 8 June 2006, 13:26 GMT 14:26 UK
Britain's streets of debt: Going for broke
GOING FOR BROKE
Shiralee Doveston
I hate having to dodge the door all the time... It's the worst thing, because you know they know you're in

Young mother of two Shiralee Doveston is worried. She owes so much money that she cannot afford to live - and does not know what to do.

She wants to go bankrupt, but does not have the 310 administrative fee.

Shiralee lives on benefits but owes 9,000 in unpaid household bills and doorstep lenders.

She has never been able to borrow from a bank or a credit card company - so she borrows from the home credit industry, where average interest rates are 177%.

Britain has a 1.1 trillion binge borrowing problem.

Shiralee lives on the Batchley Estate in Redditch, West Midlands, where one in every ten residents has a serious debt problem.

With high unemployment, many people have to survive on benefits for long periods.

Sometimes we will not answer the door which is horrible - I hate having to dodge the door all the time.
Shiralee Doveston

They are dependent on doorstep lenders such as Morses and Provident. Alternatively they pay for goods through using services such as Buy As You View - where appliances are bought through putting money into a slot fixed to the side of the television.

"It is not possible to survive without people like Morses and Shopacheck," Shiralee Doveston says. "You do not get enough benefits. It just does not make ends meet."

This is the sub-prime market, used by some 10 million people, who are excluded from services offered by mainstream lenders.

"Sometimes we will not answer the door which is horrible," says Ms Doveston.

"I hate having to dodge the door all the time. It's the worst thing, because you know they know you're in."

Overcharging

In the UK today, four million people say they always run out of money at the end of the week or month.

In April this year, the Competition Commission (CC) found that the lack of competition in the home loans sector had allowed companies to exploit their customers - possibly earning them as much as an extra 100 million.

The Competition Commission says home credit lenders lent 1.5 billion to 2.3 million customers in 2004 and collected 1.9 billion in repayments.

If you didn't have the money then Kim (loan shark) would be going mad at you and he'd be telling you that he was going to break your legs
Mark

When people have little or no money to buy goods, it affects the entire community - especially local businesses.

Batchley is a typical example. Here the community has been decimated by the decline in manufacturing jobs. Last year the estate's post office closed, sounding the death-knell for the Batchley paper shop.

The owners, Mick and Sue are being forced to close the business down with debts of 30,000.

More than 800 newsagents have closed down last year alone.

Vulnerable residents

With a high proportion of vulnerable residents, Batchley is also prime territory for illegal money lenders such as Kim Cornfield.

"Mark" who lived in Batchley with his wife and two children, first got into financial difficulty when he lost his job making car dashboards for Rover.

A wallet
Consumers are paying a high price for doorstep loans, a report says

At first, doorstep loans provided a financial cushion for him and his family. But soon he found himself borrowing money from Cornfield, who had intimidating terms and conditions for non-payment.

"If you didn't have the money then Kim would be going mad at you and he'd be telling you that he was going to break your legs," Mark said.

Cornfield had at least 75 "customers" on his books who he said owed him 80,000.

His average interest rate was more than 600% - but in some cases he charged rates up to 15,000%.

Cornfield's penalty clauses included threats to torch a defaulter's house and offers to reduce payments in return for sexual favours.

He was finally jailed for two years following an undercover operation by Birmingham City Council's loan shark team.

In all, 72 loan sharks are under investigation in the Midlands.

Way out?

Shiralee's only realistic way out of her debt nightmare is bankruptcy. But it costs 310 - money she can ill afford.

Thanks to friends and family who have donated their unwanted knick knacks she manages to raise it through several car boot sales.

Bankruptcies and individual voluntary arrangements (IVAs) are on the rise.

Former newsagents Mick and Sue want to avoid bankruptcy. They own a house, and would lose it if they are forced to go that route.

So instead, after talking it through with their local Citizens Advice Bureau, they have chosen to take out an IVA.

A broker contacts their creditors on their behalf and strikes a deal to pay off some of their debts and avoid bankruptcy.

Going For Broke, the fifth of five programmes on Britain's Streets of Debt, will be broadcast Friday 9 June at 0915, on BBC One and here online.


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