File trap: The Destructive Effects of Illegal Loans

Initially, she received only 2,000 euros (U.S.), a sum that seemed small to keep business alive, but then another 150 thousand euros. Each new loan was taken to pay the old one, and the debt only increased.

For nearly five years, I have paid over 500 thousand euros in file, for 20 different persons”, says Izeti [a name set by editorials], 60-year-old. In addition to the paid amount, he lost his business, his target, and other assets, which amounted to 1m euros.

The only real estate left behind has left the mortgage in a bank to get the credit he paid the file.

In his small town, he says, it's very simple to take money with guilt, because the hawks are very popular and well known to all. But, according to him, the files are “death per living”. The strength to overcome the situation has been found only in children.

“Bull and salt eat, and don't take money with the file”, says Izet, who faced nearly a decade of illegal debt.

Illegal borrowing, serious problem in Kosovo

The Izet case is not isolated. In Kosovo, charges against suspected people are often reported, while mentioning millions of euros in damages.

In October only this year, authorities filed charges on two separate cases, with eight people allegedly causing damages of up to 8m euros. The prosecution called for the seizure and return of 21 business residences and establishments that the injured had given to the guilty because they could not repay debts.

Lawyer Xhevahire Miftari Kloppner says that many citizens fall prey to the files because of the lack of quick access to formal loans, especially those with low incomes or no mortgage assets. According to her, in some cases citizens feel that they are borrowing a common debt but then face interest rates ranging to 20 percent per month.

Often, victims are business - expanders, but unable to pay off debts, forced to close, and lost property. With the debt rising, hawks often exert pressure, threats, and heavy property seizures. Some people, even, have been forced to abandon Kosovo.

The Challenge of Investigation

Kosovo Police data shows that during the January-September 2025 period, 13 guilty cases have been opened. Last year, that number was 23, and in 2023 the authorities had opened 24 cases.

During 2021-23, police have destroyed 106 criminal groups, of which nine were found guilty. Out of 740 suspected of organised crime, 78 were involved in the event mostly in the Pristina and Pec region.

According to Miftari Kloppner, the actual number of cases is much higher because many injured are afraid to report. But, monitoring of the Kosovo Institute for Justice (IKD) shows that in 2025 there has been increasing cases submitted by citizens, thanks to closer co-operation among prosecutors and the use of secret investigation measures.

Flamur Kabashi, a researcher at the IKD, says a major challenge remains the fact that many injured do not abide by statements given to the prosecution, as they face pressure. According to him, courts often fail to make the declarations meet, which weakens the process.

The IKD estimates that the Constitutional Prosecutor in Prizren has marked the greatest progress in investigating the case of the culprits, and that this model should be followed by all prosecutors in the country.

According to the Kosovo Penal Code, the culprits are fined and sentenced to imprisonment of between 6 months and 12 years, depending on the extent of the damage. However, according to data provided earlier by former Justice Minister Albulen Haxhiu in August of this year, out of 1,752 prisoners, only four were convicted of convictions and eight were held in custody.

These are not merely isolated works, they are part of a criminal chain that strikes the most vulnerable and contributes to a deep sense of injustice in society”, Hadziu had declared.

Kosovo's corrective service did not respond to REL's interest in what the number of prisoners currently is for criminal activity “fede”.

Economic injury

Experts say guilty sentences must be stiffened, to create a real obstacle to illegal lenders.

Shkumbin Misini, professor of economics at AAB College, points out that businesses that face a capital shortage or difficulty in obtaining formal loans often fall prey to convictions. High interest rates 20 percent monthly, and up to 200 percent annually, according to him, are disastrous.

No business can afford these rates. And, to return the bond debt, businesses work, but at a loss, and go bankrupt, while culprits take over property, machinery, company stock”, he says.

According to him, the consequences are long term for the economy: lowering formal investments, increasing circulation of money outside the banking system, reducing taxes and undermining the country's financial stability.

Miftier Kloppner stresses that changes in legislation is needed to effectively address the guilt phenomenon. It suggests that the law clearly define the responsibilities of both parties involved, aimed at strengthening sustainability and lowering lending practices outside the legal framework. /Periscopi