What is The 30 Day Impulse Spending Rule?
Impulsive spending is one of the primary reasons why most people are unable to save money. The 30-day rule is meant to prevent you from making impulse purchases. It entails postponing a purchase for 30 days. Write down the item, service or anything else you want to buy on a piece of paper and tell yourself that you are going to think about it for 30 days. This delay will give you enough time to do your research and decide if it is worth purchasing the item. If you still feel the urge to buy the item after the 30 days, go ahead and purchase it. If not, channel the money into your savings account.
Can I Save Money with a Low Income?Yes, you do not need to earn thousands of dollars per month to start saving. The goal is to start small and increase the quota as your financial status improves. Here are seven expert tips on how to save money on a low income in the current economic times.
- Keep Housing Costs Low: Unknown to most people is that housing cost is the biggest monthly expense and can quickly drain a budget. By making sure that your housing costs do not exceed your budget and resonate with your financial capability, you will have more money to put away as savings. The rule of thumb is that the total housing expenses should not exceed 35% of your net monthly income.If you live in a rented apartment, look for cheaper housing that is secure and ideal for your lifestyle. You can also discuss with your property owner about trading work on the apartment for a reduction in rent.On the other hand, if you are a homeowner, you can rent out one of the rooms in your house to reduce the house payment cost. Come up with a robust way of cutting down utility costs and ensure that the home is in good condition to cushion yourself from costly repairs and unnecessary upgrades.
- Get Out of Debt: According to a report by CreditCards.com, as of March 2019, the average interest rate on credit cards was 17.65%. Accumulating debt means that you will have more monthly payments and less money to channel into the savings accounts.
- Consider Reducing Entertainment Costs: Reducing entertainment costs will make it possible for you to put aside more money for retirement and other financial goals. For example, instead of an expensive dinner at a restaurant, hold a potluck dinner at home. Schedule a movie night complete with your favourite soda and popcorn at home.
- Buy Products When Necessary: Unnecessary expenditures, even when you have a budget in place, will make it difficult for you to achieve your financial goals. Peer pressure is one of the root causes of unnecessary purchases. Commit to buying products and spending on services only when it is necessary.
- Control your Expenditure on Groceries: On average, a family of four spends at least $900 per month of groceries. You can save money on groceries by preparing a menu plan for each week, create a weekly shopping plan and stick to it, avoid purchasing unhealthy foods and beverages, and learn to cook at home instead of buying processed meals and snacks.
- Create A Zero-Sum Budget: A zero-sum budget means that you create your budget in such a way that every dollar that you earn has a pre-determined use. Any money left after the expenses should be directed into the savings account.
- Automate Savings: This is probably one of the easiest ways of saving more money when on a low income. Direct your bank to channel a specific amount of money into your non-retirement or retirement account at one particular date every month.
How Can I Save Money on a Daily Basis?Trying to increase the amount of money that you set aside as savings every month does not mean that you restrict yourself to the life of a hermit. Doing away with small expenses daily can make the process easier and less stressful. Below are five tips on how to save money every day.
- Reduce your Expenditure on Snacks: The first thing that you need to note is that your friends and colleagues have a significant influence on how you spend your money during weekdays. Consider reducing the amount of money that you spend on snacks such as bubble tea and soybean drink. That extra $3 or $2 will have a major impact on the amount of money you will have saved at the end of the month.
- Have a Daily Budget: List down the things you spend money on every day and stick to the plan to prevent impulsive spending. Instead of an expensive lunch meal, go for a healthy gourmet salad. It will keep you rejuvenated and full the entire afternoon and even improve your appetite at dinner.
- Carry Food From Home: Packing food from home will not only help you save money that you would have spent on lunch but also help you live healthily. Needless to say, a homemade cheese sandwich or tuna is more satisfying as you have control over the size of the portion.
- Try Off-Peak Dining: By dining during off-peak hours in one of the local restaurants, you might get up to a 50% discount on your favourite meal. Most of the bakeries also offer a generous discount off their buns and bread to customers who purchase after the usual dinner hours. You can pick a few and use them to prepare breakfast or supper the following day.
- Leave your Credit Cards at Home: If you find it difficult not to purchase things that you have not budgeted for, consider leaving your ATM and credit cards at home. This will ensure that you only have liquid cash for things that you have already planned for always. You can also go an extra mile, withdraw a fixed amount of money from the ATM every week, and commit to never spending more than that.
How Can I Save Fast?The amount of time it will take to accumulate the amount of money you need for a particular project is dependent on the amount of money you put aside as savings. Below is a list of tips that you can use to save money fast.
- Sell items that you no longer need and deposit the cash into the savings account
- Sign up for free customer rewards programs
- Change bank accounts to leverage perks and earn more interest
- Instead of buying gifts, consider making homemade gifts
- Learn the 30-day rule and stick to it
Final ThoughtsRegardless of your current financial situation, you can start moving in the right direction by starting to save today. Sometimes, all it takes is the decision to start saving and making the first step in the right direction to get things moving. Note that the very first step is usually the hardest part. Focus on the end goal whenever you feel like giving up. Get in touch with us for more tips about personal loans in Singapore as well as how to get out of debt.
How Do I Help a Friend who is Struggling Financially?The first thing to note is that it is OK to help a friend who is struggling financially. However, it is imperative to be careful how you do it to avoid ruining your relationship with him or her or making the process unnecessarily weird to both of you. Here are four tips on how to help your friend without making things weird.
Give AnonymouslyAnonymous giving is one of the easiest ways of helping a friend who needs financial help without making things awkward between the two of you. You do not need to inform them that you are giving them a personal loan to help them sort out the bills or expenses. Send them a gift card with a voucher that they can use to purchase household items in one of the local stores or send them an encouraging card with cash in it. Thanks to advancement in technology, you can also shop online and direct the store to deliver the products to them on a specific day of the week when you are sure they are home.
Be CasualThis builds on the previous tip about giving anonymously. Nobody can predict the future and what goes around comes around. When offering financial help to a friend, it is recommended to be casual about it. Otherwise, they might feel like you are judging them or taking advantage of their situation. Concisely, be cool about it and make the repayment terms flexible and ideal for them. Consider their current situation. You can even request them to come up with a repayment plan that best suits them to avoid any challenges down the road.
No Strings AttachedA personal loan is great, but it can easily ruin your relationship with your friend or family member if you are not careful how you go about the process. Sure, you will agree on a repayment plan that is ideal for both of you but do not expect something in return afterward. That is, do not expect him or her to “owe you one” whenever you call in the favour. Remember, the idea is to help them become financially stable out of love, with open hands, and expecting nothing in return.
Know Your LimitsWhen offering financial help, it is important to consider your current financial capability to avoid plunging yourself into a financial turmoil. Know your limits and adjust your budget accordingly. Otherwise, if you give more than you can afford, you will end up feeling resentful and will eventually complicate your relationship.
How Can I Help A Friend or Family Member Get Out of Debt?Saying “I’m in debt and I don’t know what to do” aloud can be terrifying to even someone you trust. Therefore, do not expect your friend to confess to you openly that they are in debt and need your help. Here are some signs you should look out for before you make the next move.
- Your friend has become more secretive and no longer talks about their finances as openly as before
- Your friend has changed his or her spending habits, for example, spending less or overspending without a clear plan of repayment
- Sold their car and started using public transport
- Have had a recent loss of income due to incidents such as divorce, illness, bereavement, or being made redundant at their workplace
- Seem depressed, anxious, or withdrawn
- Avoid speaking or interact with you altogether
Help them get a Seasonal/Part-time JobWith the holidays just around the corner, most local retailers are looking for seasonal employees who are flexible and willing to help them keep their stores running during the busy festive season. Organise a meeting with your friend and offer to help them look for a seasonal or part-time job. The extra income will help them pay some of the bills and rebuild. Note that, there are plenty of seasonal jobs even after the holidays that they can take advantage of to repay pending bills and loans.
Attend Financial Training Sessions TogetherAs mentioned earlier, it is tough for someone who is in debt and still struggling to open up even to close friends and relatives. Look for a financial expert in your locality and book an appointment with him then tag along your friend. However, before you do that, you need to contact them to know when they will be free and willing to attend the sessions. Come up with a reason why it is essential to attend the training sessions without making them feel weird about it. For example, instead of telling them the classes will help them get out of debt, explain to them the benefits of the classes and even give examples of people in your circle who attended the classes also though they are financially stable. The point we are trying to put across is that, you should not make them feel that the main reason why you proposed you attend the training sessions is because they are going through a rough patch financially. Do your homework to be sure that the financial expert is licensed, reputable, and legally accredited to offer financial help so that you get value for money and time you spend on the sessions.
Help Them Create a Repayment Plan and BudgetThe financial training sessions and your interactions so far will make your friend or family member feel comfortable sharing their financial woes with you. Make sure you do not reveal this information to anyone without their consent, as that would definitely ruin your relationship with them. During one of your interactions with them, discuss the importance of creating a budget and repayment plan. You can even use an example of how you managed to repay a loan by paying it off in small manageable bits. Go an extra mile and help them create a repayment plan for the loan and a monthly budget for their household. Both plans should resonate with their current financial capability. The financial expert can also chip in and help you come up with the plans.
Introduce the Debt Snowball MethodOne of the easiest ways of getting out of debt is by paying more than the set minimum monthly payments on your debts and credit cards. The debt snowball method speeds up the repayment process and helps build momentum. The first step involves listing down all the debts starting from with the smallest to the largest. The excess funds should be channeled to repaying the small debts, while still making the minimum monthly payments to the large loans. Once you complete repaying the small loans, starting channelling the extra cash to the large loans. The beauty of this repayment strategy is that it creates a snowball effect that makes it easy for you to pay the smaller balances first and save the large loans for last. The goal is to commit all the extra dollars towards debts. Introduce this repayment method to your friend and explain the benefits as well as how it works in simple terms. Offer to help them budget and monitor the repayments on a weekly or monthly basis depending on the issue at hand.
Help Them Sell Things They No Longer NeedWe all have a chunk of things lying in the garage or in other parts of the house that we no longer use or need. Yes, a part-time job will help your friend get extra cash to clear small debts, but you can get more extra cash by selling things that they no longer need online or offline. Sure, there are some items that they no longer need but will have a difficult time letting go. Remind him or her the reason why they are selling it. You can even do a cost-benefit analysis – show them the amount of money they will get by selling off the items and the overall benefit of using the money to repay the debts.
Final ThoughtsUse the above tips to help your friend get out debt and become financially stable again. The most important thing to remember when doing so is that you are doing it with an open heart, out of love, and without expecting anything in return. Be willing to hold their hand and walk with them through each phase and commit yourself fully to the course.
Every once in a while, you are bound to take out a loan. According to the latest statistics released by the Monetary Authority of Singapore, loan uptake has grown by 4.7% year-to-date. This article covers the top ten frequently asked questions by people looking to obtain a loan from licensed moneylenders.
What should I consider before taking a loan?
Whenever you are in the market for a loan for your business or personal projects, you should keep these things in mind:
- Before you approach a moneylender, be sure to consider the alternatives, which include government financial assistance schemes. The first step is to contact the agencies to establish the nature of the various schemes
- That you are legally bound to fulfil the loan contract
- Consider if you can abide by the contractual terms in regards to your income and other financial obligations. This way, you will be able to borrow what you need and know how to structure a payment plan. If you are unable to meet the contractual terms, the late fees and the interest payments could be a financial burden not only to yourself but to your family and dependants as well
- The moneylender ought to explain the loan terms to you in a language that you can understand as well as to provide you with a copy of the loan contract before signing it. You must read it through and understand the repayment schedule, the interest rates, and the applicable fees
- You should field offers from different moneylendersto find the most favourable terms. This will call for you to read through the terms and conditions in the loans contract before committing yourself to a single money lender
However, the most important thing to consider is the terms that allow the lender to lodge a caveat on the sale proceeds of your property when you default on the loan. With that said, you will not be able to sell the property without paying the lender in full. If the loan repayment is taken from the proceeds of a sale of your property, it should clear the loan or a substantial chunk of the loan.
How much can I borrow?
There are two types of loans; secured and unsecured. For starters, there is no limit for the amount of secured loan. For unsecured loans, on the other hand, the table below shows the amount you can borrow from licenced moneylenders in Singapore at any time:
& Permanent Residents
|Less than SGD 10,000||SGD 3,000||SGD 500|
|At least $10,000 and
less than $20,000
|SGD 3,000||SGD 3,000|
|SGD 20,000 or more||6 X monthly income||6 X monthly income|
What are the allowed interest rates charged by moneylenders?
As from October 1, 2015, the government put the interest cap at 4% per month. However, the cap is not dependent on the borrower’s income level or whether the loan is secured or unsecured.
The interest cap also remains for each month that the loan goes unpaid. The computation of the interest charged on loan must be based on the principal amount remaining after the deductions from the original principal amount made by or on behalf of the borrower.
For example, if you take out a loan of SGD 1, 000 and you repay SGD 400, only the remaining SGD 600 can be used to compute the interest. This late interest is charged on the amount paid late. The moneylender cannot charge interest on the total amount outstanding but only on what is due to be repaid.
Suppose that you fail to pay the first instalment of SGD 200, for your SGD 1,000 loan. The moneylender should only charge interest on SGD 200 and not on the remaining SGD 800 since it is not yet due.
What are the acceptable money lending fees?
With effect from October 1, 2015, moneylenders are only allowed to charge the following fees and expenses:
- A maximum of SGD 60 charged every month when you delay on the repayments
- A maximum of 10% of the principal after the loan is approved and granted, otherwise known as an administrative fee
- Any legal costs ordered by a court of law following a successful claim by the moneylender for loan recovery
Essentially, all the applicable fees and costs should not exceed the original principal amount.
How do I ascertain the legality of a money lender?
One of the biggest headaches faced by borrowers in Singapore is in ascertaining whether the money lender is licenced or not. Fortunately, the Ministry of Law maintains a database of all the licenced moneylenders in Singapore. Moreover, you should be mindful of the moneylender that acts in the following ways:
- They use abusive language and threaten you
- They ask for your SingPass user ID and/or password
- They retain your identification documents such as work permit, driver’s license, NRIC card, passport, ATM card or employment pass
- Ask that you sign a blank or incomplete Note of Contract for the loan
- Grant you the loan without issuing you with the Note of Contract if they fail to disclose the terms and conditions of the loan
- Grant you the loan without following the due process such as approving the loan via phone, emailing you before they receive your loan application form and supporting documents
- Withhold an amount of the principal amount
These practices are not acceptable, and if you encounter them, you should report the lender to the Registry of Moneylenders.
How can I distinguish between an advertisement from a licensed and unlicensed moneylender?
As from November 1, 2011, licenced moneylenders can only advertise through these channels:
- Consumer or business directories in print or online media
- The lender’s website
- Advertisements placed in or outside the business premises
These advertising rules will help you tell the difference between licenced and unlicensed moneylenders. This includes receiving SMSs, emails, and other forms of advertisement not outlined above.
Can I rely on the advert content to take a loan from a moneylender?
You should seek clarification from the moneylender on the specifics of the terms and conditions and not to rely solely on the advert’s contents. Unfortunately, most Singaporeans overlook the importance of consulting the moneylender and taking loans based on what they have seen or heard from the adverts.
What should a loan guarantor/surety consider?
If you are standing as a surety for a loan, ensure that:
- You understand the responsibilities of the surety
- You receive a copy of the Note of Contract when the loan is granted to the borrower
- The moneylender has explained in detail the terms and conditions of the Note of Contract in a language that you can understand
- The moneylender does not take possession of your identification documents
- The moneylender does not get their hands on any information that contain the passwords to your user accounts
The surety can be an individual or a firm. The relationship between the borrower and the surety is solely based on trust that the borrower will repay back the loan, if not; the surety will pay it on their behalf.
What should I do after the moneylender grants the loan?
After you get the loan, ensure that:
- The moneylender delivers the loan amount in full less the administrative cost of 10% of the loan amount
- Pay the loan amounts on or before time to avoid incurring late interest and late payment fees
- Get a receipt for every instalment paid to the moneylender
- Get a statement of account for all your loans at least once every January and July and check the correctness of the statement
- Retain all the statements of accounts and payment receipts
How do I lodge a complaint against a moneylender?
As a borrower, you have the right to sue a moneylender against unfair practices or in the event the lender breaches the Note of Contract. Here is how to lodge a complaint against a moneylender:
- Contact the Registry of Moneylenders on the phone via 1800-2255-529 or the website
- Attend an interview with the Registry officers and provide the relevant information and supporting documents related to your loan transactions as well as the circumstances of your dealings
If the moneylender has engaged in unfair practices, you can pursue the matter through the Small Claims Tribunal. You could also sue the moneylender under the Consumer Protection (Fair Trading) Act. The court has the power to remove any loan transactions considered to be substantially unfair or exorbitant.
These are the rules and regulations issued by the Registry of Moneylenders on June 1, 2012, and were last updated on July 15, 2019.
You can also use the loan calculator on our website to figure out how much you should pay in administrative fees, the monthly and total interest payable, as well as the total amount you will payback. Contact us today for professional advice when you are looking to apply for a loan in Singapore. Our support team is on hand to answer every question you might have about borrowing a loan in Singapore.
Neither a borrower nor a lender be; / For loan oft loses both itself and friend.
Polonius, King Claudius’s Chief Counsellor in Shakespeare’s Hamlet
When you are in a financial crisis and your back is against the wall, borrowing from a loved one may seem like an easier and more cost-effective option compared to private lenders or a bank. However, taking a loan from friends and family leads to several unexpected issues that can complicate relationships. This is exactly what Polonius advises in Shakespeare’s famous play, Hamlet.
You may be lucky to have ride-or-die family and friends who are willing to support you when you need quick cash. But accepting money from them is usually a terrible idea. Read on to know why.
1. Money Weakens Relationships
Mixing finances with relationships can distance you from those you love. Most of us have a tough time setting boundaries with our near and dear ones. So, when a loved one offers a loan, the terms of repayment are seldom discussed. Over a period of time, this breeds resentment in the relationship.
For instance, loans taken from family and friends are rarely documented. These decisions happen over a coffee or during a get-together. This leads to confusion, arguments, and disputes in the future, adversely affecting the relationship.
2. The Process Lacks Documentation
People are always eager to help their loved ones in need. However, in such casual transactions, both borrowers and lenders miss out on following the loan-processing steps traditionally followed by licensed moneylenders or financial institutions.
Since loans and gifts have separate tax implications, insufficient documentation can lead to tax scrutiny by the IRAS. Ideally, both the involved parties should include a signed promissory note, a detailed repayment schedule, and any other documents that meet the IRAS requirements governing private lending. However, in their eagerness to get a loan or help their loved one, both the parties miss this step, leading to several tax implications in the future.
Lastly, failing to document the terms and conditions leads to a lack of clarity which can be disastrous if the borrower and the lender have different expectations. For instance, if you borrow money from a friend to fund your startup, they may assume that their financial support gives them a voice in your daily business operations. On the other hand, you may feel it’s okay to miss an occasional payment as the lender is your close friend. This can lead to disappointment and disagreements down the line.
3. It Leads to Social Awkwardness
Accepting loans from loved ones can complicate your daily life, making you feel judged for your spending habits or social interactions. For instance, a family member may taunt, criticize, or discourage you from taking a break, going out for dinner, or even buying a new pair of shoes when you are yet to repay the loan. Even your grocery bill will be under scrutiny. Such situations open up unwanted dialogues about the debt, making it awkward for everyone.
Moreover, if the debt gets mentioned carelessly in a random conversation years later, it may cause you much embarrassment, even if you have paid it off. At times, the lender may be your close friend or relative; yet, they may never let you forget that they helped you in need, putting you in an excruciatingly awkward position.
Licensed moneylenders, on the other hand, have nothing to do with the debtors’ lifestyle or personal life. As long as borrowers stick to the repayment schedule, they have complete control over their spending habits, making them feel empowered and treated justly.
4. You May Lose Trust and Dignity
When you borrow from a family member or friend, the loan comes with zero interest and no deadlines. Due to this, you may take your time repaying the loan. However, this can cause your friends or family to lose trust in you, forcing them to think that you are taking undue advantage of the relationship. Thus, you lose mutual trust and dignity, thereby ruining your relationship.
5. You Have Better Options
The easy availability of institutional loans and the government’s efforts to regulate the moneylending market in Singapore, has made it easy for people to get personal loans. So, even if you have family and friends who are happy to help you through your financial crunch, consider the aforementioned fallout scenarios and opt for a private lender.
Here are the obvious benefits of getting a loan from licensed moneylenders in Singapore.
The Loan Application Process Is Strictly Professional
Licensed moneylenders have certain responsibilities towards the borrowers and will do everything to protect their personal information. Thus, in case you default on your loan, you don’t have to worry about a moneylender interfering with your daily routine (like your family or friends) or threatening or shaming you in public (like the ah longs). Instead, you can consult the lender and negotiate the terms of repayment.
Interest Rates Governed by the Registrar of Moneylenders
Since licensed private moneylenders in Singapore are strictly regulated by the government, they adhere to the code of conduct laid down by the Ministry Of Law. They are restricted by the amount they can lend and the fees and interest they can charge. Hence, licensed lenders are transparent about the interest rates, charges, fees, eligibility requirements, and other terms and conditions.
Even People with Poor Credit Rating Qualify for Personal Loan
Licensed moneylenders assess the borrower’s income and total debt servicing ratio before granting a loan. Yet, they do not have stringent requirements like most traditional institutions that reject loan applications from people with a poor credit rating.
Licensed lenders are less rigid and offer a separate loan package for people having a bad credit score. In fact, they can help you consolidate and repay all the debts, thereby improving your credit rating.
Though borrowing from a loved one comes with zero interest rates and flexible repayment options, it has strings attached. The burden of debt can put a huge strain on your relationship, bringing in feelings of guilt, resentment, and a loss of trust.
Without a doubt, your family and friends have your back in tough situations. But it’s not worth losing a precious relationship over money matters. So, the next time you need money, avoid approaching your loved ones. Instead, look for an authorized moneylender who can help you meet your financial needs.
Short-term loans, namely personal and payday loans are increasingly being used by the Singaporeans to take care of their requirements. However, most borrowers are unaware of the debt collection process that ensues. So, when they fail to pay back their loan and experience unreasonable or illegal conduct by debt collectors, they don’t know how to protect themselves.
Legitimate moneylenders are bound by the Ministry of Law, Singapore. So, when they collect the debt themselves, they take care to adhere to the rules and regulations laid down by the Government of Singapore. Moreover, they only hire debt-collecting agencies that are members of the Credit Collection Association of Singapore (CCAS). This organization is dedicated to the professional credit agencies in Singapore and its members are expected to adhere to the industry’s code of conduct.
Unlicensed moneylenders and ah longs, on the other hand, involve debt collectors who resort to illegal loan recovery methods. If you are the recipient of unwanted attention from a debt collector, read on to know when their actions amount to harassment.
What’s legal in debt collection
A debt collector or moneylender can legally:
1. Seek repayment status on an expired debt
Personal loans from licensed moneylenders have a statute of limitations. If you fail to pay back after this date, debt collectors can legally seek payment on these financial obligations.
Though they cannot harass or mislead you into paying off the debt, they may call or email you or talk about pursuing a lawsuit for payment on the debt. However, all this should be done while adhering to the code of conduct laid down by law. They cannot use a threatening or abusive tone.
2. Act as a mediator between you and the lender
A debt collector can legally help you negotiate with the creditor and propose a comfortable installment plan for loan repayment. So, if the debtor can prove that they incapable of making the full repayment, the CCAS code of conduct allows them to propose a repayment plan, making the process stress-free for both the private moneylender and the borrower.
3. Talk to your family or friends
If you fail to pay back the loan or aren’t responding to their reminders, debt collectors can get in touch with your family and friends. They often scan through the borrower’s social media profiles or drop in by their workplace or home to ask about your whereabouts.
What’s not legal in debt collection
1. Any form of harassment
The debt collector or the creditor cannot induce harassment, distress, or fear through verbal or physical abuse. The below-mentioned actions are forbidden under the Protection from Harassment Act.
- Stalking: They cannot deliberately follow you, linger around your whereabouts, or circulate personal information, compromising pictures, or videos of you.
- Threat or intimidation: They cannot indulge in verbal abuse or threaten you to repay the debt. So, if a debt collector bangs on doors, makes threating phone calls, shouts vulgarities from outside your home, or impedes your business, you should call the police.
- Violence: They cannot cause physical harm to you and your loved ones. Also, they cannot behave in a way that causes alarm or distress to you or your loved ones.
- Vandalism: They cannot resort to vandalism like setting fire to your property or writing on the walls outside your home. Similarly, they cannot damage your property by pasting banners or ads or spraying paint on any of your assets.
- Unlawful assembly: They cannot show up in groups to pressurize you for loan repayment, take possession of your assets, or prevent you from leaving the area. For instance, they cannot get a mob of angry and burly people to tow your car away.
- Shaming on social media: They cannot post about your debt or share your details on social media.
2. Impersonating government officials
It’s illegal if a debt collector pretends to be a government agent or authority like an income tax official or a police officer. Also, they cannot use fake government letterheads or put up spoof sites that mimic government websites as a way to collect money from the borrower.
3. Adopting unfair practices to collect the debt
Debt collectors cannot take part in unfair practices as an attempt to collect the loan. They aren’t permitted to confiscate your property unless permitted by law. Also, they cannot collect any amount that’s more than what you owe.
The way ahead: Know your rights
Licensed moneylenders will never engage in any of the aforementioned illegal methods to recover the loan. So, if you find yourself being harassed by a debt collector, without a doubt, the lender is not licensed by the Ministry of Law. Unauthorized lenders often hire debt collection agencies or individuals to harass and abuse borrowers.
Consider the following tips when you find yourself being harassed for loan repayment.
- Don’t be intimidated. Though it’s a stressful situation, it’s critical to keep a good head on your shoulders to think of ways to get out of this harrowing situation.
- Involve the police. When the lender or a third-party debt collector does anything to harm you or your loved ones, make sure you record the violation. Contact the law enforcement authorities to put you out of immediate danger until any further action is taken.
- Apply for a protection order or an expedited protection order against the debt collector and the lender if their actions constitute an offense under the Protection from Harassment Act. If the debt collection agency is a member of the Credit Collection Association of Singapore (CCAS), you can write to the association to exercise your dispute resolution rights.
Defaulting on a personal loan can be expensive as you not only have to pay a high penalty but also bear the brunt of the damage caused to your credit rating. Therefore, it is wise to pay off your loan on time.
But if your repayment schedule goes haywire, followup from debt collection agencies or the moneylender is inevitable. In such a situation, being informed about your rights can help you stay sane and put you on the fast track to financial wellness. So, the next time you are contacted by a debt collector, consider the tips shared in this post and take effective measures to manage the stressful situation.
Questions? We have answers
Yes, debt collection is legal in Singapore. However, there are limits to what the debt collectors are legally allowed to do. The Credit Collection Association of Singapore (CCAS) set up an industry code of ethics which helps to find a solution to any problems between collection agencies and debtors.
If you are being harassed by debt collectors in Singapore and their actions constitute as an offence under the Protection from Harassment Act, you can lodge a complaint with the CCAS which is the Credit Collection Association of Singapore and apply for a Protection Order against the debt collectors.
Alternatively, if the harassment gets out of control, you can seek help from the police. Be sure to understand what is legal and what is not legal for a debt collector by reading this article:
If the debt collector carries out one of the following acts, it would be considered as harassment:
- Inflicting injury
- Threats or intimidation
- Impersonating government bodies
- Unlawful assembly
- Damaging or taking your belongings
If you believe a debt collector is harassing you, the most obvious step is to call the police. You can lodge a complaint with the CCAS and apply for a Protection Order.
Another option would be to hire a lawyer to help you negotiate an instalment plan with the creditor. This may lead to the creditor being satisfied and in turn, reduce the frequency of calls from debt collectors.
It is illegal for a debt collector to come to your workplace and harass you. Read more on what a debt collector is legally allowed to do here: