Maybe you have taken a loan from a money lender before. But what happens if you are unable to pay money lender Singapore?

If you’re thinking, “How could this happen?”, there are many reasons. Maybe your financial situation has changed, or your business went under. In some cases, it could happen because of a job loss. Whatever the reason, it is a stressful situation.

Borrowing requires discipline, but you may find yourself unable to repay what you owe. Whatever the reason, debt and financial stress can be overwhelming.

If you find yourself in a situation where you are unable to pay money lender Singapore, this article will guide you through the steps to take.

We will look at what may happen to you and what steps you should take if you are not able to settle the debt you owe a money lender.

What Happens When You Are Unable To Pay A Money Lender?

When you find it hard to fulfil the terms and conditions of a loan set by the lender, it’s important to be aware of what may happen to avoid falling into a trap.

Here are some possible scenarios.

Loans Will Not Be Approved In The Future

Licensed money lenders don’t consider your credit report. However, every loan application passes through the money lender’s credit bureau. The credit bureau provides the money lender with information on a borrower’s loan limit, unpaid loans, and repayment history.

This means if you default on your loan payment, this will appear on your repayment history. With such a record, licensed money lenders may reject your future loan applications.

Legal Action May Be Taken Against You

Licensed money lenders are allowed to take legal action against defaulters. The lender, through its lawyer, will issue demand letters and sue you for the outstanding debt if you can’t pay up.

Lenders are allowed to charge you a fee for the legal suit.

You May Lose Your Collateral

If you have taken a loan and used your car, house, or any other asset as collateral, you are likely to lose it if you fail to pay your debt.

Your lenders have the legal right to seize your asset for failing to pay the loan.

What Licensed Money Lenders Can Do

Licensed money lenders are governed by the regulations set out by the Ministry of Law. They have a code of conduct that they need to follow.

In this section, we look at what licensed money lenders are allowed to do and what they should not do when a borrower defaults.

A licensed money lender has to follow the Moneylender’s Act when collecting debts. Here are some of the practices a money lender is allowed to do when collecting the debt.

Mail You A Demand Letter

The licensed lender is permitted to mail you a demand letter for you to pay the amounts owed. The demand letter can be delivered to your home by a licensed lender. This is the last resort.

Contact You At Reasonable Hours

The licensed lender is allowed to contact you at reasonable hours. Most licensed lenders employ debt collectors to help them collect their debt.

They can send you messages or call you during reasonable hours regarding the debt you owe.

Take Legal Action Against You

As mentioned, licensed lenders are allowed to sue you for failing to pay your debt. They are also allowed to charge you a fee for the collection of the debt.

What Licensed Money Lenders Can’t Do

As per the Moneylenders Act, licensed money lenders are not allowed to do the following when collecting their debt:

Inflict An Injury

Licensed lenders are not allowed to inflict injuries on a borrower. If this happens to you, report it to the police.

Intimidating, Threatening, And Harassing

It’s against the law for a licensed money lender to harass you. Report such behaviour to the police.


Any licensed lender who stalks you for not repaying the loan is acting against the law. This should be reported, and the lender reprimanded.

Damage Or Vandalising The Property

You should report any damage or vandalism inflicted by a money lender. Such acts are against the law.

If you experience any of the above, you should also raise a complaint with the Credit Collection Association of Singapore or with the Registry of Moneylenders at the Ministry of Law.

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Options To Take If You Are Unable To Pay A Money Lender

If you are unable to pay your debt, there are various steps you can take to avoid legal action from the lender.

Inform The Lender If You Are Unable To Pay The Loan

The first step you should take is to inform the lender you are not able to pay the loan on time. Explain how long the delay is likely to take.

If it’s a short period, then request patience from the money lender. However, if you think the delay in paying will take longer, then you need to renegotiate the payment terms.

Renegotiate Payment Terms

If you are facing a financial crisis and you will not be able to make the repayment, then renegotiate. Request the lender to renegotiate the terms. You can ask for a longer repayment period and a lower monthly repayment.

Don’t be tempted to go to a loan shark to clear your debts, as this will create more problems. Renegotiate the terms then stick to the new repayment plan.

Go For Debt Counselling

This will help you accept your debt status and provide you with the resources and tools to help you repay your debts. You can reach out to various debt counselling organisations for help.

File For Bankruptcy

Borrowers who owe more than $15,000 can file for bankruptcy. When you file for bankruptcy, money lenders will not file a legal suit against you. It also stops interest from accumulating.

But this should be a last resort as your credit score will be adversely affected.

When you file for bankruptcy, you may qualify for the Debt Repayment Scheme (DRS). Those who qualify for DRS will have an assignee appointed by the high court to help with debt management.

It is important to note that if you declare bankruptcy, you are not allowed to leave Singapore.

Can The Registry Of Moneylenders Assist You In Negotiating With A Money Lender?

The Registry of Moneylenders will not be able to help you negotiate as the outstanding debt is between you and the licensed money lender.

You can approach social services companies if you require help to recover from serious debt problems. Social service companies will provide you with general credit management information, credit counselling, and assistance to renegotiate for a more workable repayment plan.

There are several organisations available in Singapore to help you organise the repayment of your debt.

How Credit Counselling Singapore Can Help

Credit counselling provides borrowers stuck in debt with financial guidance and support on how to manage their debts. It can help borrowers with their unsecured debt problems.

Through education, counselling, and facilitating renegotiation, a borrower will find it more manageable to pay the debt.

In Singapore, credit counselling is done by a non-governmental organisation known as Credit Counselling Singapore (CCS). CCS is recognised by the Association of Banks in Singapore.

CCS aims to work with borrowers and help them regain control of their finances and dignity. It helps borrowers understand their financial situation and the options available to them. In short, CCS offers the following services:

  • It provides the borrower with information on debt management
  • Financial counselling
  • Financial literacy talks and workshops
  • Debt management programmes
  • Enterprise credit counselling programmes for business owners in debt

You can attend one-on-one training with a counsellor who will work with you and facilitate repayment. The counselling sessions are affordable.

If you are struggling to pay your debts, then look for a CCS counsellor and work with him or her to rebuild your finances.

Other Debt Repayment Help Avenues

Other than credit counselling, other organisations offer help with debt management. There are organisations such as Blessed Grace Social Services, which helps borrowers in distress.

Under the DRS, the lender will not be able to carry out any legal action or increase the interest.

Under DRS, an official assignee of the court works with you to plan how to repay your debts. To qualify for DRS, your debts should not exceed $150,000 and you should not have been on a DRS in the last five years.

Always Seek Help With Your Debts

If you find yourself in a situation where you are unable to pay money lender Singapore, it is important to act quickly and decisively.

There are a few options available to you, and the best course of action will depend on your circumstances. However, whatever route you choose, you must keep calm and act quickly to minimise the damage caused by defaulting on your loan.

U Credit is one of the best money lenders in Singapore. We offer some of the most affordable loans, and that makes it easy to pay off your debt.

If you are experiencing financial difficulty, we will give you a listening ear and work with you to repay the debt. Contact us now or apply for a loan with us today.