Dear Mrs Macaulay,
In 2018 I borrowed $50,000 from a loan company. The payback was $67,000 over a seven-month period. I was paying the loan and brought it down to a certain amount. I lost my job and advised the company of this, seeking a way where I could still pay the loan but at a rate where no late fee would be added. The loan officer agreed to this and said, “if you can come in with $10,000 per fortnight the loan will be done fast”. I advised her that although I wasn't working, I would try my best.
Fast forward to January of 2019, I got a job that wasn't paying much, but told them that I would still pay what I could. I understand that this is a business and I understand that late fees would be added, but what I can't understand is how can a loan go from $50,000 to $103,000, and each time I pay it is going up more and more. The last time I paid $3,000 the bailiff informed me that $3,000 cannot cover the loan and his fees. Now they're telling me I owe $200,000. They posted my picture in the newspaper and on Facebook, stating that they are looking for me, when I advised them to take me to court so this can be sorted. I have spoken to them on numerous occasions.
Please tell me what to do.
You merely described the institution you borrowed from as a 'loan company'. The type of institution would have helped me to focus directly on your specific legal recourse.
I assume you were to pay a fixed monthly sum during the seven months, and you were paying as agreed. Then you lost your job and took the precaution of advising the company of this fact and the loan officer sought a way for you to continue making payments. From what you relate, you in effect agreed to your original contract being varied.
You have not said whether your original loan agreement was in writing, which you and the authorised officer of the company signed. This contract would contain all the terms, especially the date the loan would be made, the amount of the principal and the interest to be charged at a per centum rate per annum. The contract must have been made before the date when you were actually loaned the money. If it happened the other way around, then such a contract would be unenforceable.
And by the way, you were entitled to have signed the contract as varied after the loss of your job. This is a requirement of the Moneylending Act.
Then, please note that under the Act, in order for the lending contract to be legal, it must not either directly or indirectly require the payment of interest which amounts to 'compound interest', or that the rate or amount of interest would be increased because of a default in the payment of the sums due from the borrower. The original contract made before the handing over of the loan sum may provide for the payment of 'simple interest' on the sum due from the date of default until the date of final payment. It also provides that such default interest should not exceed that contracted as due on the principal sum.
This I understand to be, that interest cannot be charged on interest. The Act also provides that any agreed imposition of the 'simple interest' shall be in writing, and signed by you.
You did not mention whether the loan officer informed you, or whether you were ever informed by any staff of the loan company, that you would be charged interest (and the rate) because of your default. It seems to me that you were also not required to sign any agreement to pay default interest. That would make any demand for such interest illegal and unenforceable.
I also suppose that your liability would have grown even greater since you wrote your letter.
You are entitled to write to the company and demand a statement, which must include the date of the loan agreement, the amount of the principal sum, and the rate of interest per centum per annum. You should also ask for the statement to include the payments made by you, and the dates when these were made. You should also request the amount of every sum due to the company from you, and the date on which the sums become due, and the amount of interest which has accrued. You should also request the amount of every sum they claim remain outstanding, and the interest thereon.
If the company fails, without a reasonable excuse, to comply with your request within one month, the company cannot, as long as you are still in default, claim or be entitled to sue you for or obtain any sum due under the contract relating to the principal or interest, and no interest can be charged for the period you are in default. This the Act provides for. It also provides that if the company has charged you for any charges and expenses it claims are incidental to or relate to the negotiations for the loan and the granting of it, that this is illegal, and if included in what the company claims you are to pay, the company's officers would have been and are acting illegally, and the company would owe you the sums of such charges.
The Act says such monies are a debt owed by the company to you — this is why you need to apply in writing for your statement of account from the beginning.
You see, you said you told the company that they must sue you, and it was after this that you learned the sum they now claim from you had reached $200,000.
Under the Act, yes, they can sue you, but you need not wait for them to do so. You can go to the parish court in your parish after you make the application to the company in writing for your full statement of account.
Since it seems that the aggregate interest has not only reached but has surpassed the sum actually lent to you, and taking into account what you had paid is four times what they are now claiming, you must go to the parish court and file your application for an account from the company and that you be relieved of any further liability for the continuing claim being made by the company about your loan. Also remember if they added charges for the negotiations and granting of the loan, to add your claim for repayment of that.
Also, you should ask that the costs of your application be paid by the company to you, so that the judge can consider exercising their discretion in your favour in this regard.
Remember, if the company fails to provide you with your statement which I suggested pursuant to the Act, you can ask the judge to order them to provide it to you before the hearing of your matter commences. It is something that the Act says you are entitled to have and if the officers try to be creative about its contents rather than provide a true statement, it is an offence.
I also suggest that you obtain the services of a good commercial lawyer to assist you with your claim. Yes, it will cost you initially, but with expert help you ought to succeed in your claim. From your letter I am certain the company is not one which the minister has exempted from the provisions of the Act, and your chances of success on the face of the figures you mentioned, are high, with a good commercial lawyer acting for you.
I wish you the best of luck and that you take the steps to free yourself from the yoke, and that you have learned a lesson to keep away from such businesses if you ever need another loan in your lifetime.
Margarette May Macaulay is an attorney-at-law, Supreme Court mediator, notary public, and women's and children's rights advocate. Send questions via e-mail to firstname.lastname@example.org; or write to All Woman, 40-42 1/2 Beechwood Avenue, Kingston 5. All responses are published. Mrs Macaulay cannot provide personal responses.
The contents of this article are for informational purposes only, and must not be relied upon as an alternative to legal advice from your own attorney.