Philip and Victoria Sherlock from Pontiau in Wales have been reduced to living in their car, parked on an industrial estate in Warrington, after their payday loan spiraled out of control, and the pair were evicted from their home.
The couple told The Sun that their problems started when Philip (41) fell ill and had to have an operation on his stomach in October last year. He could no longer work as a landscape gardener, because of the physical demands of the role, so he had to give up his £400 a week job and claim £84 a week in benefits. The couple had Victoria’s income of £78 a week, from working as a shop assistant, but it wasn’t enough to cover their bills.
They tried to sell their assets to make ends meet, but the Mirror reported that even after selling two double beds, a fridge, a washing machine and a TV, they couldn’t cover their rent. In desperation in January they turned to payday loans to pay their rent, and they ended up borrowing a total of £830.
According to The Daily Mail, Victoria (32) tried to close the shortfall by working longer hours in the shop, but in return, Philip’s benefits were cut. With no extra money coming in, they couldn’t pay off their loans – let alone pay the rent – so they were forced to roll them over, and faced sky-high interest payments and charges.
Last month they were eventually evicted from their home. The couple drove to Warrington, so they would be near Victoria’s work, but when they approached Warrington Council for help with accommodation, they were told they were not a high enough priority for emergency accommodation.
It has now been a month since they had somewhere to call home, and all the time, their payday loans are becoming a bigger and bigger mountain to climb. The couple said they didn’t think twice about getting a payday loan, because it seemed like an easy way to get hold of money. However, they wish they’d never done it.
The ease with which people can build up unmanageable payday loans has been a major concern for some time. In January, new rules were implemented to ensure that the fees and interest can never accumulate to become more than the sum that was originally borrowed. However, clearly it is still possible to slip into an expensive debt problem with this sort of loan.
The Money Advice Service says this makes it essential to think very carefully before taking on this kind of debt. Rather than a convenient way to top up until payday, they suggest it should be considered a highly expensive and risky strategy.
They say non-essential spending should be put off until you have the funds available. If there is a cost out-of-the-blue that you cannot put off, they suggest looking at other forms of borrowing, such as a credit union, credit card, loan or overdraft – as long as you know you will be able to pay the money back before the interest mounts. If you choose an alternative form of borrowing, it’s still essential to know what this will cost you.
If you are struggling with regular expenditure such as bills, your mortgage or rent, then they warn that borrowing is not a solution. If you are falling short on monthly payments, then borrowing will simply put the problem off for a few months – during which time it will make matters worse by adding debt repayments to the problems you face.
They say it’s essential to look carefully at whether you can get any help from the government, or increase your income in any other way. You should also speak to anyone you owe money to, if you are unable to make payments on time, to see if they will let you spread payments over a longer timescale.
If none of this solves the problem, or you have any concerns at all, it’s well worth speaking to a debt charity like Step Change or Citizens Advice, who will talk you though all the options and help you find the solution that’s right for you.