TOKYO: Shocked by the suicide of three debtors last month, Japan is rushing through a Bill aimed at clamping down on loan sharks who are pushing increasing numbers of the recession-hit population into a debt trap.
Victim support groups estimate there are up to 60,000 unregistered lenders are operating in Japan, many of them gangster-related, while more than a million people are thought to have become victims of their unscrupulous tactics.
“The problem has been getting markedly worse, with numbers increasing particularly fast in the past three years,” said lawyer Yuko Mizorogi, who specialises in advising victims.
The rules, likely to be presented to parliament this week and becomes law this month, will bump up penalties for lending at more than 109.5% a year to include prison terms of up to five years and fines of up to 100mil yen (RM3.23mil).
Changing the law will likely spur police to put a higher priority on chasing loan sharks, a task in which they show little interest at present, said Mizorogi.
Recession, redundancy and divorce have left many short of cash in the world's second-richest country. Some are forced to make up the shortfall by borrowing, even at extortionate interest rates.
“In most cases, they start by borrowing from consumer credit companies. Then, when they find they can't cover the payments, they turn to loan sharks,” said Kazuo Kiuchi, who runs the Tokyo area office of a support group for those whose debts have run out of control.
Illicit lenders are able to extort rates of 1,800% a year or more from their cash-strapped victims by continually harassing them or threatening violence.
Often fear of exposure makes borrowers pay up.
“What many debtors dread is that the loan shark may call their workplace and ask the boss what he plans to do about his deadbeat employee,” said Kiuchi, adding that some victims could solve their problems by simply standing up to loan sharks.
People of all ages turn to Kiuchi for advice – young workers who have been laid off, middle-aged people struggling with home loans and elderly people who have fallen into the red after financing a family event, such as a grandchild's wedding.
Loan sharks often supplement their income by trading lists of names of vulnerable heavy debtors.
Despite the efforts of support groups like Kiuchi's, some victims fall through the net.
Three weeks ago, a couple in their 60s and the wife's 81-year-old brother killed themselves by crouching in the path of an approaching train in the industrial city of Osaka.
It emerged the wife had borrowed just over 10,000 yen (RM322) from a loan shark, according to a Mainichi newspaper interview with a friend of the dead woman.
Even after she had paid back 100,000 yen (RM3,219), the lender kept up such a torrent of threats that the family decided life was no longer worth living, the paper said. – Reuters