The phone calls from the loan collector got increasingly more threatening. "You have to come up with the money. Sell your house quickly. . . . Sell your clothes and all your belongings."

And then: "Sell a kidney. You have two, don't you? Many of our borrowers only have one. You can get $28,000 for a kidney. You can get $9,500 for an eyeball," said the collector, Eisuke Arai, according to tapes of the calls.

By this time the person receiving the calls, a retired metalworker, was so frightened that when he heard dogs barking he thought it was debt collectors coming after him, his lawyer said. He never dreamed he would be responsible for paying off a big loan when he agreed to be a guarantor, and now he was nearing a nervous breakdown. His lawyer, who asked that his client's name not be published, advised him to tape the phone calls, which he did.

With that tape, he filed the first criminal complaint against a company in the small business loan industry, which has thrived in Japan's recession, charging interest rates of 30 to 40 percent. National television has broadcast the recorded threats repeatedly, making real for many Japanese the lurid portrayal of loan collectors in a popular comic book.

What has angered many people is the fact that banks are refusing to lend to many small- and medium-size businesses, forcing them to turn to the high-interest loan companies. But the banks are funding the loan companies.

These "shoko loan" firms will lend money to small businesses without collateral, as long as there is a guarantor. But guarantors are often not informed of the final amount being borrowed until the collector shows up demanding payment. That's what happened to the retiree in suburban Tokyo.

The president of a small water purifier company asked him to be the guarantor for a $19,000 loan the businessman said he desperately needed to pay his workers' salaries, according to Kenji Utsunomiya, the retiree's lawyer.

The company president was an acquaintance, not a personal friend. At first the metalworker refused to be the guarantor, but the company president begged, bowing his head nearly to the table. He even wrote a letter promising never to cause him any trouble.

So the retired man agreed. It was a considerable amount of money for him to guarantee, more than his annual pension of $11,400. All this was four years ago.

Last year, the water purifier company went bankrupt. In the spring, the retired man got a phone call from a collector giving him the news, but also a great shock. The company had borrowed $109,000, of which he, as one of two guarantors to the loan, owed $54,000.

The retiree didn't have that kind of money and said he couldn't pay. He told his lawyer that he doesn't recall writing on the contract a guarantee limit of $95,000, and can't imagine doing that because it would be so far beyond his resources. "If I knew I was going to be responsible for that amount, I would never have signed it," he told his lawyer.

The loan company was Nichiei, the biggest of the shoko loan firms. It counts big Japanese and foreign banks among its investors and creditors.

Politicians have called for the money lending law to be tightened and for a lower ceiling on the interest rate, which is currently 40 percent. But the companies defend themselves by saying they fill a gap in the financial system.

The Financial Supervisory Agency, Japan's financial regulator, asked 13 Japanese and foreign institutions, including Citibank and Merrill Lynch, to report on their lending to Nichiei and its main competitor, Shohkoh Fund, the Yomiuri Shimbun and Japan Broadcasting Corp. reported today.

Loan companies can borrow from the banks at 2.3 percent interest and lend to struggling companies at more than 20 percent plus handling charges, pushing the total to more than 30 percent. The business has been very profitable.

It's not fair that taxpayer money has been used to bail out banks, which refuse to lend to small businesses but instead lend to these companies, said Kiyoshi Ueda of the opposition Democratic Party of Japan. "Citizens then have to take out high-interest loans from loan sharks and some of them hang themselves. This is what's happening," he said at a recent meeting of the House of Representatives' finance committee.

The shoko loan companies target guarantors, who are usually civil servants or employees of big firms who agree to be a guarantor as a personal favor to someone, according to Kiyohito Wada, a lawyer who works on some of the civil suits filed against the companies.

Paying the high interest rates, many businesses go bankrupt, but not before borrowing well beyond their initial loan, he said. The guarantors, to avoid an embarrassing and possible career-ending call from a loan collector, usually pay the money, using their families' resources.

Nearly 200 lawsuits have been filed against loan companies, most by guarantors who found themselves liable for sums far above the original loan amount.

"People don't understand the contracts," Wada said. "The loan officer asks the guarantor to write down $190,000 as the upper limit on the guarantee, saying it's just a formality and will not mean anything."

Nichiei has declined requests for information or comment. The 25-year-old loan collector, Arai, was arrested last Saturday. He had worked for the company for just over a year, quitting last year.

Kenji Utsunomiya, the retired guarantor's lawyer, last month announced a lawsuit seeking $28,000 in compensation for psychological damage as well as the filing of the criminal complaint.

Special correspondent Shigehiko Togo and researcher Akiko Yamamoto contributed to this report.