In such uncertain times, it’s not unusual for a person to struggle to pay a loan.
A sudden loss of income, increased cost of living, taking on several loans at a time, and other situations may make it difficult to make your loan payments on time. This may cause you to eventually default on your loan.
Once you default on the loan, the money lender has a right to come after you for its money.
But even if you still cannot pay the debt, you are entitled to be treated civilly and fairly by the money lender. Any form of licensed money lender harassment is not allowed.
The Moneylenders Act in Singapore stipulates licensed money lenders to follow due processes when pursuing debt.
In this article, we will discuss what happens when you’re unable to pay a money lender in Singapore. We will tell you what money lenders can and cannot do when collecting debt and where you can get help in case of licensed money lender harassment.
What Licensed Money Lenders Can Do
The Ministry of Law, by the provision of the Moneylenders Act, regulates the activities of licensed money lenders, dictating what they can and cannot do in pursuit of debt.
The strict restrictions ensure that borrowers’ privacy and dignity are respected.
The data of borrowers remains confidential, and they are protected from harassment, threats, and assault. Even when you can’t pay your debt, the money lender has no choice but to follow the legally set procedures for debt recovery.
With their hands tied, most licensed money lenders outsource debt recovery to debt collection agencies, which act on their behalf.
In the past, these agencies were the reason the moneylending industry in Singapore got a bad rep because of their brutal ways.
But thankfully, the issue was resolved by the establishment of the Credit Collection Association of Singapore (CCAS) in 2013.
This body sets the standards and the code of ethics that debt collectors in Singapore must abide by. Now, you need not worry because even debt collectors must deal with you ethically and lawfully, and you can report any violation to the CCAS.
So going by the CCAS and the Ministry of Law’s guidelines, here’s what a money lender can do, directly or through a debt collector:
a. Call you
b. Contact you via social media
c. Inform your family and friends
The money lender may visit or call your friends and family regarding your unpaid loans. But it must not harass them in any way.
d. Inform your bosses and colleagues at work
The money lender may also opt to stop by your workplace and ask to see you. In the course of doing so, if the need comes up, the lender can mention your outstanding loan.
Even so, the situation rarely necessitates involving your close circle. Most debt collectors are excellent debt negotiators and will first seek a solution through mediation, which typically works.
They will help you renegotiate your repayment terms and come up with a figure you can comfortably pay in monthly installments. They can either forward your repayment request to the money lender or offer you a repayment solution.
So don’t worry when debt collectors show up. Speak with the agents, and they may help you work through the debt.
What Licensed Money Lenders Cannot Do
You now know that the worst a money lender can do when you default on your loan is to inform the people who are close to you, and even this rarely happens.
So long as you maintain communication with the money lender or the debt collection company, they will not resort to any drastic measures.
Nevertheless, the Singapore moneylending industry is made up of both licensed and illegal money lenders.
Illicit lenders, although their activities are illegal, are not bound by the code of conduct and will often go out of their way to recover the debt using different tactics. So the question now is, how far can they go?
Here’s what to expect from illegal money lenders, which their licensed counterparts cannot do:
Use Threats, Intimidation, And Harassment
Unlawful money lenders may use threats, abusive words, vulgarities, and insults to intimidate you. Others physically harm you or your loved ones, or your property.
But this is illegal because even if you owe them money, no one is above the law.
Under the Penal Code, those who commit such acts can be arrested and prosecuted. You may even report a lender who uses intimidating gestures without verbalising them.
Singapore has no tolerance for those who interfere with a person’s physical integrity by inflicting injuries.
Perpetrators are liable to a $5,000 fine, up to two years in prison, or both. The punishment escalates to 10 years in jail, fines and caning if the perpetrators cause a severe injury such as a fracture, dislocation, or disfigurement.
So if something like this happens to you, report it to the police immediately.
It is illegal for anyone to vandalise your property by painting it, posting notices, hanging banners, writing profanities, or using other similar tactics to embarrass you. The Vandalism Act sets a $1,000 fine for anyone found doing these.
This refers to when a person constantly follows you or your loved ones, monitors your movements, or shows up everywhere you go, especially in places that you frequent.
Doing such things is illegal, primarily when they are intended to intimidate or pressure you.
Damage Or Seize Your Property
Debt collectors have no right to come up and grab your property. For any of them to do that, they must first obtain a Writ of Seizure and Sale that the Singapore Court issues after a series of court proceedings.
So do not be stressed by their threats to take over your property because if they attempted it, the law would punish them.
Debt collectors cannot also damage your property because that’s a violation of the Penal Code, and they could get up to 12 months in prison and a fine. They don’t need to wreck something –just slight damage is bad enough.
Converge In Unlawful Assemblies
An unlawful assembly refers to the coming together of five or more persons approaching you as a mob to intimidate you. If found guilty, this mob is liable to face a jail term.
Even if there are less than five people but they issue you threats, they can still be prosecuted for intimidation and harassment.
Where To Get Help If You Are Harassed By A Licensed Money Lender
As mentioned above, a licensed money lender is bound by the standards and ethics of the industry and will not harass or be violent toward you.
So when you cannot repay the loan and the lender contracts a debt collector to recover the money, they should come in peace and work with you to find the most suitable way to repay the loan.
Nonetheless, if any violence is meted out towards you or you are intimidated or harassed in any way, here is where to get help for licensed money lender harassment:
Make A Police Report
Your first course of action should be to call the police, send them a text, or write to them via their website.
Indicate, precisely, the way the lender or the debt collector is breaking the law, and the police will instruct you on what to do next. You may even request a Protection Order against the persons harassing you.
Report It To The CCAS
The CCAS regulates the actions of licensed debt collectors in Singapore and should investigate the collector’s actions towards you. But it can only exercise authority on debt collectors that are members of the CCAS.
If so, the CCAS will contact the debt collector and may even mediate between you and a licensed money lender.
Unfortunately, CCAS is unable to extend this assistance if you borrowed money from an illegal money lender in Singapore or fall victim to a loan scam.
Report It To The Registry Of Moneylenders
The Registry of Moneylenders regulates the Singaporean moneylending industry.
So if one of its members harasses you or engages in questionable behavior such as issuing you with an empty or incomplete contract, asking you to lie on your contract, or charging interest rates that are higher than the recommended rates, contact the Registry immediately.
Renegotiate Your Loan Repayment Plan
Renegotiating the loan should work well for both you and your money lender because it makes it easier for you to make your monthly payments.
To the lender, it keeps the money coming in and reduces its risk. You also get to preserve and repair your credit history so you can access credit in the future.
Do not opt to file for bankruptcy because doing so would ruin your credit rating, even if it helps you avoid legal proceedings.
Instead, seek to renegotiate your repayment plan by developing a payment strategy. The debt collector may also help you come up with a plan of how to settle the licensed money lender and may even present you with a strategy.
If you owe less than $150,000, you may opt for the Debt Repayment Scheme (DRS), but this depends on whether the Singapore courts will allow it.
Although your uptake of this service will appear in your moneylender report, you will have five years to repay that loan. However, it’s still a better option than bankruptcy.
Never Tolerate Licensed Money Lender Harassment
If you need to attend to a financial need or to settle another loan urgently in exchange for a loan with better rates, contact U Credit.
We are a licensed money lender that offers various loan products at some of the most attractive interest rates. We are proud of the integrity and professionalism we show towards every one of our borrowers.
We absolutely do not condone any form of licensed money lender harassment.
We have a dedicated team of financial experts who will work with you to help you choose a manageable loan that will ensure your repayment journey is as comfortable as possible.