£6000 Debt Grew To £116 000

If you don't repay a loan, and a lot of time passes, the debt can grow to unmanageable proportions, as happened to an unfortunate borrower in Manchester in the United Kingdom.

A grandmother has been forced to put her house up for sale after she ended up owing a massive £116 000-on a £6000 loan. Esther Osei, 57, borrowed the money in 1988 to pay for her father's funeral and to buy a new cooker for her Clayton home.

But she could not meet the cost of the loan and 18 years later, the amount she owed had grown to £116 000 ... Esther said: 'I borrowed the money when I was grieving for my father. I just signed the papers.'

When the lender applied to take possession of her home, Esther sought help by going to the North Manchester Law Centre. Lawyers negotiated a deal at Manchester County Court . . . A law centre spokesperson said Esther should never have entered into the loan agreement. 'It was a very high rate of interest.'

Required: Based on the above case study, prepare a report (or essay) that highlights the main issues. You can refer to other sources including the textbook.

Word limit: 1,500-2,000 (excluding references)

Format: Use a few headings to organise your report/essay. Abstract or executive summary is not required. You may use 2-5 relevant references.