Runaway borrowers the new face of China’s personal credit boom
by He Huifeng / 6 December 2017/ Reuters
China’s online lending boom has sent a steady stream of new clients to Guangzhou lawyer Luo Aiping in recent months: the parents and siblings of young men trapped or ruined by usurious debts.
“These young men, the son or the brother in a family, are actually subprime borrowers with little in the way of savings and no assets,” Luo said. “They’ve recently been encouraged to access a dizzying array of online microcredit platforms to fund their own consumption and have cared little about the exorbitant interest rates.
“Now they’ve run away from their creditors and left behind big troubles for their parents, who are not wealthy.”
Zeng Hong, from Hunan province, is a typical client. She went to Luo for help because she had been harassed by calls from debt collectors for months after her 27-year-old brother ran away, leaving behind a two-year-old son and more than 300,000 yuan (US$45,400) in debts.
Zeng wanted to help repay her younger brother’s loans, but 300,000 yuan is a big sum for a poor family and her husband strongly opposed her plan. She approached Luo to ask whether the debts and interest her brother had incurred were legal.
Luo said she realised how serious the issue was when she heard her cleaner, Liu Zhen, crying one day over her 21-year-old son’s debts. He had borrowed 70,000 yuan from several online lending platforms and his debts had swollen to more than 100,000 yuan within a few months due to the high annualised interest rates charged and penalties for loan delinquency. Read more..