Dear Mrs Macaulay,
A few years ago I took a loan from a loan company. I got into difficulty paying back the loan — I paid most of it but I just couldn't afford the rest. A year passed and they contacted me saying I owed $40,000. I couldn't find all that amount at once, so I started paying back what I could on a weekly basis. I kept paying, but all I kept hearing was that I owed some huge figure, so I went to the head office in Portmore and spoke to the director who said he would get back to me, but hasn't. I went into the office in my parish and told them to take me to court. Up to today's date they are still calling for payment — over five years now. What can I do because I am tired of them.
You have not told me any of the terms of your loan agreement. For instance, what was the rate of interest which you agreed to pay on the monies you borrowed? Was there a penalty situation if you failed to pay? Was the interest due upon failure to pay your balance the same as the original interest rate? Was it attached only to the balance due, or as a penalty? Was there any provision in the contract for add-on fees to be paid on the happening of certain events during your payment period? Was the lender only operating under the Moneylending Act of 1938, or was it under the regulation of the Bank of Jamaica or the Financial Services Commission?
You say that you paid back most of the money you borrowed but you could not make any payments for a year and then they contacted you. You said you were paying them weekly sums but they kept demanding huge sums. This seems to me that this was and is a business which falls within the Moneylending Act, and it may or may not have an order of exemption. I do not know and clearly you do not either.
If the business you borrowed from is in the first category I referred to above, then it operates under no legal regulation and can charge borrowers any rate of interest it chooses. The frequent practice is to charge a very high rate indeed; much higher than a commercial bank or a cooperative society. This is because under the Moneylending Act, pursuant to section 14 (1) of the Act, the business could have had an exemption. You see, by this subsection the minister is given the power to grant orders of exemptions to such businesses so that they can charge very high rates of interest, even higher than 80 per cent, and that they can compound the interest charged each day.
Since you have not given me any of the answers to the questions I asked in my first paragraph, I cannot clearly and definitively advise you what you can do because they are still making claims against you even after five years.
You say you have told them to take you to court and they have not. What I can advise you to do is to take a copy of your loan agreement and all the correspondence you have from them to a lawyer who has commercial law expertise and get considered legal advice. The lawyer will know how to find out what kind of lending business this is, and advise you accordingly. Depending on its status, the lawyer can determine whether it would be a good idea for you to take them to court or not, to obtain an order for them to produce their statements of account of your loan so it can be decided by the court whether the charges of interests were legal or not.
If their charges were and are illegal, then you may get some money back if such a claim was filed for you. If they were and are, however, legal under the state of the present law, the Moneylending Act, then if they take you to court or you take them and they counter claim, then they will get a judgement against you for the sum you owe, plus interest on it. The good thing about this is that their very high interest will end on the day of judgement and the legal interest on judgement sums will be much lower then theirs.
You really should have sought advice and so should all borrowers before borrowing money from businesses which are not commercial banks, building societies or cooperative societies. These are strictly regulated but the others are not and you can easily end up becoming bankrupt within a short period of time, without understanding why and how it all happened. This is because of the unconscionably high interest rates they can charge, and they can compound it daily.
I hope I have been of some help despite the paucity of facts in your letter. Please go to a lawyer as I have suggested and get good and proper legal advice.
You must not just do nothing and let the money you owe increase by leaps and bounds. You have to act promptly to cut its growth, otherwise one day they may decide to take all you have and leave you destitute. So go to a lawyer NOW!
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.