Woman forced to sell flat over soaring loan

A woman who took out a £10,800 loan for a new kitchen faces having to sell her home after the debt spiralled.

Amanda Jonkler, 55, had the loan in 1987 at an interest rate of 29.3 per cent. She had divorced and was finding it difficult to cope financially.

Mrs Jonkler repaid more than £43,000 - four times the value of the original amount - but the loan company, Hurstanger, sought a court order to gain possession of her two-bedroom flat in Kingston-upon-Thames, her home for more than 20 years.

The company agreed at Central London County Court to drop its application for a possession order after she agreed to pay a settlement figure of £60,000 within 12 months. It means she will have repaid a total £103,000 - almost 10 times the original loan.

Mrs Jonkler's debts grew because she failed to keep up the regular monthly payments of ?240, and interest rapidly accumulated on the outstanding debt, which she says she did not know about.

She says she will have to sell her home, which overlooks Richmond Park and is worth an estimated £275,000, as there will be financial penalties if she fails to pay the £60,000 by next November.

John Fellows, the founder of Hurstanger, said that the rate of interest charged on the loan was "on the low side" compared with a range of 32 to 43 per cent that was typical at the time.

He declined to say how many people had taken out loans with his Coventry-based company since it was founded in 1973, but said the average loan was £6,000 and the maximum £30,000.

Mrs Jonkler's case echoes other recent examples of people who take out relatively small loans but end up drowning in debt due to high rates of interest. Fork-lift driver Dereck Rawson-51, hanged himself at his Cambridge home in May after running up debts of more than £100,000. Stephen Lewis, 37, from Nottingham, hanged himself last July, leaving debts of £70,000. Moves to reform existing consumer credit laws, were announced yesterday in the Queen's Speech.