Is this the Floris loaning system?
If so, first of all, this is definitely not the place to be asking. Start a thread on the Floris sub-forum instead.
I'll answer you, though. If this is Floris / The landowners submod...
Every 2 weeks, +50% interest is added to the amount of money you borrowed. So if you borrowed 1,000, you'd owe them 1,500 in 2 weeks. Thus, it is a very bad idea to ask for large loans. The most you should ever take as a loan is 1,000, and even then it isn't wise to borrow money until you've got a steady economy going.
Also, no, it isn't possible to get rid of debt unless you pay it back. You'll probably just have to start over.