What do you do if you cannot pay a private loan shark?


Quick Answer

A private "loan shark" is a person or entity that lends money without official licensing or oversight from government agencies. As such, anyone who borrows money from them is not legally obligated to repay them, especially if the "loan shark" uses intimidation or threats against the person in question.

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What do you do if you cannot pay a private loan shark?
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Full Answer

When a person borrows money from an official lending entity, such as a bank or licensed money lending business, he signs contracts with that entity outlining the terms of the loan. These terms are subject to federal regulations that protect both parties. For example, the law prevents the lender form unjustly modifying the terms of the loan to extort additional payments, as well as outlining clear penalties for borrowers who do not repay the loans.

A private lender does not operate under the same pretexts as official entities because they are not licensed and registered with the state or federal government. Private lenders typically offer loans with little to no paperwork and place exorbitantly high interest rates as a way of making illegal revenue. These individuals also frequently resort to intimidation tactics, such as threats of physical harm, if the borrower fails or refuses to meet the lender's terms. Such tactics are illegal and should be reported to the authorities immediately.

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