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Committee looks at high interest lending

Posted on 9th July, 2014 by Lincoln Against Poverty

Tackling high interest lending from legal and illegal sources will form the next phase of a city council review.

City of Lincoln Council’s Community Leadership Scrutiny Committee and its partners will be looking at the issue at its meetings in July and August, after it was identified as being a key issue for the city from the anti-poverty strategy and action plan.

A report which went before the committee last night (Tuesday) revealed that between April 1, 2013 and February 11, 2014, Lincoln Citizens Advice Bureau Specialist Caseworkers were approached with 386 priority debts worth a total value of £459,535, and 1,421 non-priority debts, worth a total of £2,396,435.

Priority debts include mortgage and rent arrears as well as other money owed which could result in a person losing their home. Non-priority debts cover such things as credit and store card debts as well as payday and doorstep lenders.

A case study also showed one person who took out three high interest loans borrowed £2,000 but will have paid back £4,210.

Councillor Karen Lee, Chair of the Community Leadership Scrutiny Committee, said: “As our review of poverty showed, many people across the city struggle to live on limited incomes.

“This problem can be all the more acute for those struggling to repay high interest loans, from both legal and illegal lenders.

“For many, this can lead to a spiral of debt, where one loan is taken out to repay another, which can have huge consequences for both the individual and their family.

“Throughout July and August, Community Leadership Scrutiny Committee is working with partners to review the issue of high interest lending, to find ways we can work further together, to challenge this pressing issue for our city.”

The Community Leadership Scrutiny Committee refocused its work in July last year to look at poverty and mitigate the short to medium term effects through working with partners.

This has resulted in the publication of a strategy, which can be downloaded by visiting www.lincoln.gov.uk/poverty, and an action plan being created.