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High interest, heavy debts burden many Okinawans

Date Posted: 2004-01-29

Personal consumer debt is on the rise in Okinawa, and with it, the number of people encountering financial distress. According to Okinawa’s Credit Card and Consumer Credit Protection Association, 2,444 individuals declared personal bankruptcy in Okinawa last year.

“The number is significantly higher than a year before, and the worst is still to come,” predicts Association Chairman Hiroshi Ishihara. “The local economy has been in bad shape for a long time and many people have lost their jobs. As those people have no way of getting a loan from banks they end up turning to consumer money lenders, so called “sarakin,” that charge very high interest rates, and eventually many of them become unable to repay,” Ishihara explains.

He said that many people who initially take out only a small loan end up taking a loan from another lender, and then from a third one, and so on. Lenders often charge as much as 36 percent a year in interest. “It is very easy to get a loan from these companies, but very difficult to pay it back,” Ishihara said.

The problem has gotten especially bad on Miyako Island, where the economic situation is perhaps worse that elsewhere in Okinawa. “Borrowing from consumer loan companies has more than doubled in one year in Miyako, and that’s a sure indication of trouble ahead,” Ishihara stated.

He also said that although a record number of people filed for personal bankruptcy, there are many more individuals who cannot do so. “The number of problem cases is actually much higher. It costs at least Y250,000 to go to court, and that has to be paid up front. People who borrow money from these lenders do not have that kind of money in the first place,” Ishihara said.

There are currently more than 100 registered money lenders in Okinawa. There are also an unknown number of unregistered money lenders who are often connected with organized crime syndicates and charge even higher interests.

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