Making money from the poor - Pt3

Standing in the queue at our local convenience store I became engaged in conversation with the woman in front of me as she purchased a packet of twenty cigarettes (£6.97). I expressed my surprise at the cost to which she told me that she 'needed' two pack of them each and every day, "Just to get through it!" Quick as a flash I thought to myself, "That's £13.94 a day which is just over £5,000 a year."

Having paid for her cigarettes (she buys the morning packet and hopes she can scrape the money for the second when it's needed) she raked through her coins and put £10 on the electricity card. Apparently that was going to be all she could afford until the next cheque came (I assume this is a benefits cheque). I asked her what she did when the electricity ran out and was told she'd go and stay at one of her children's places or perhaps a friend.

As we got deeper into the conversation she told me that she'd had, "One of them instant loans which meant she was struggling." Delving into the subject it appeared that she'd taken up an 'instant cash' loan of £1,000 from someone who'd knocked at her door last Christmas and the interest rate had turned out to be so high that, with default charges, she now owed a sum whose principal figure was something in excess of £4k. She'd managed to take out a loan from a 'proper' company and was paying it off at £25 a week. Now I don't know the term or the interest rate but I get the feeling that she, like my would-be car buyer, is paying something punitive.

When I got back I rang someone from the debt counselling business and was told that she'd probably be looking at one of the local companies whose rate would be around 20% and that this would make the time needed to pay off the debt would be five years and the charges would be around the £2.350 mark. This means that for a £1,000 'instant' loan on the doorstep, our poverty-stricken heroine was going to end up paying around £5,500 when all was said and done.

Now I know some will say she's the victim of her own folly and that she should pay off the whole thing in a year if she would but stop smoking but I get the feeling this is the easy answer. What I am more interested in is the tough questions, like:

How do we handle the fact that people can knock on a door, offer money and charge high interest and punitive default amounts?

How do we get those who would jump at such offers to get involved with their local Credit Union (and if there isn't one, how do our churches set one up?).

How do we provide debt awareness and debt coaching for those who have fallen into the debt trap?

How do we make our fellow church members aware and get us mobilised and motivated to act to resolve the situation so that we can truly set the debtors free?

Pax