What If You Are Unable To Pay A Money Lender In Singapore?

 

Debt is a common problem, and if you’ve ever had to deal with it, you know how challenging it can be to repay it. It could be because you experienced a life-altering event such as losing your job, or overspent during a bad month.

Borrowing money can become a problem if you rely too heavily on it. The speed and convenience of loans from licensed money lenders shouldn’t make you any less responsible with how much you borrow.

Suppose you borrowed money and are unable to pay money lender Singapore. What are the likely consequences? Is there anything you can do to improve things?

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

There are a few potential outcomes if you are unable to money lender Singapore. Here are some consequences:

You Might Not Have Access To Loans In Future

Your loan history is recorded in a moneylender report from the Moneylenders Credit Bureau (MLCB). The MLCB report details your available credit, current debt, and payment history with all other legitimate lenders.

As this report is accessible by all licensed money lenders, you could be denied a loan in future if you have a history of not repaying loans or have outstanding debts.

Possible Legal Repercussions

A licensed money lender can file suit against you if you fail to repay the remaining balance on your loan. This could come in the form of a letter from an attorney demanding payment or a formal debt lawsuit.

Your Collateral Could Be At Risk

Secured loans such as mortgages, auto financing, and commercial loans require you to pledge an asset, which require some form of collateral.

If you borrow money from a money lender in Singapore and cannot make the payments, you may lose the collateral you provided.

Lenders have a legal right to seize collateral in the event of default.

What Licensed Money Lenders Can And Can’t Do

The law clearly defines the legal authority of legal money lenders in Singapore. It involves protecting the borrower’s privacy and reputation.

Here is what the law allows them to do:

  • Moneylenders in Singapore can employ debt collectors to help borrowers with late payments.
  • Collection agencies can pursue overdue accounts on behalf of legal money lenders. The Credit Collection Association of Singapore (CCAS) issued a Code of Ethics that collectors should abide by. The CCAS was established to counter the widespread belief that money lenders use illegal means (such as physical force or coercion) to collect overdue loans.
  • Communicate openly and honestly about your financial situation with your family and friends.
  • Debt collectors may call you or look for you at your place of employment or your residence during reasonable hours.
  • They may suggest alternative payment terms to the money lender on your behalf.

What They Can’t Do

  • Threaten or attempt to frighten you. Money lenders and debt collectors who use foul language or threaten physical harm to you or your loved ones may be violating the Protection From Harassment Act.

The law makes it illegal to intentionally scare, anger, or humiliate another person through the use of threats, abuse, or insults. Intimidation is a criminal offense if the offender threatens bodily harm or damage to property.

  • Stalking and harassing you. It’s against the law for a lender or debt collector to harass you in any way, including following you, as stalking is a crime.
  • Inflict injury on you. Physical assault is a punishable offense in Singapore. Any money lender or debt collector that intentionally causes bodily harm to a borrower faces up to two years in prison, a fine of $5,000, or both.

The offender faces up to 10 years in jail, a fine, and caning for causing severe injuries such as fractures, dislocations, or disfigurement.

  • Vandalise your property. Tossing paint on public property or defacing it with profanity is a criminal offense under the Vandalism Act.

Taking these measures to make a borrower uncomfortable could be considered mischief and result in a fine of up to $1,000.

  • Cause damage to, or steal your property. Debt collectors may threaten to destroy or repossess your property as a tactic for getting what they want.

It’s also against the law for a creditor or debt collector to cause damage your home in the course of collecting a debt.

  •  Take part in a forbidden rally. Even if a licensed money lender wants its money back, they can’t send a mob of five or more people after you.

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

Adopt A Repayment Schedule

Contact your lender if you are having trouble making your loan payments.

Make an offer to renegotiate the repayment terms. If you opt to extend the loan, the lower monthly payments will make it easier to manage your finances. You can then have an easier job on how to settle licensed money lender debt. But you may be charged extra fees.

Also, this will extend the time you are in debt, which could compromise your other financial commitments.

Try Credit Counselling

To learn how to manage your debt better, you can opt for debt counselling. Such a social service provides you with the information, motivation, and strategies you need to conquer debt.

It will also 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.

Declare Bankruptcy

You can declare bankruptcy if you have more than $15,000 in unrepayable loans. Once you do so, money lenders cannot sue you in court and charge you any more interest. It freezes your debt and stops it from adding up.

The Debt Repayment Scheme (DRS) is another option that may be available to you. The High Court will appoint an Official Assignee to manage your debts and negotiate a repayment plan with your creditors.

Note: When you declare bankruptcy, you will not be able to leave Singapore. As a result, you should only resort to this option if you’ve exhausted all other possibilities.

Can The Registry Of Moneylenders Help You Negotiate With The Money Lender?

Unfortunately, the Registry of Moneylenders cannot intervene in your discussions as this is a private contract between you and your money lender.

You may consider approaching a social service agency to help you recover from your debt problems. In some instances, the agencies may help you negotiate a debt repayment plan.

How Credit Counseling Singapore Can Help

Credit Counselling Singapore (CCS) can help you if you’re having trouble repaying a loan from a Singapore money lender.

CCS’s previous focus was assisting those who owed money to financial institutions like banks and credit card companies. Those who have had trouble making payments to banks and other legitimate lenders can now get assistance through this system.

You must attend a presentation first before scheduling an appointment with a counsellor.

If CCS determines that you are eligible for its programme, it will offer you a payment plan with a fixed interest rate and a term length of five to 10 years.

You can determine your optimal time frame depending on your income and expenses.

Other Help Avenues

The government-run Debt Repayment Scheme (DRS) allows borrowers to consolidate their unsecured debts into a single payment.

But the total of your debts, secured and unsecured, must not exceed $150,000.

The DRS also protects you from being sued without a court order by legitimate money lenders who provided you with an unsecured loan.

Under the DRS, you can repay your debts over a fixed period of time of not more than five years.

When you have repaid your financial obligations under the DRS, you will be free from debt and get a fresh start.

There Is Always A Way Out

If you find yourself in need of a quick loan but are unable to repay money lender Singapore, you now know what to do.

You should have some awareness of the rules that govern moneylending. Don’t hesitate to contact the appropriate parties if you’re in a financial bind.

Katong Credit is the place to go if you need any further assistance.

We are a reputable licensed money lender in Singapore, offering some of the most affordable interest rates and no hidden fees.

Call us now or apply for a loan today.

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