You’ve probably heard the gruesome stories about people who’ve had pigs heads hung on their doorways by unhappy loan sharks. Many other Singaporeans get harassed by Ah Long, while others receive kidnapping threats.

Understandably, all that is very scary.

However, a licensed money lender would never do those things – not even when you fail to repay a $100k loan.

So, whether you’re apprehensive about contacting a legal loan agent or you feel obligated to default on your loan, read below. We’ll tell you what a licensed money lender can and can’t do when collecting debts in Singapore.

What A Licensed Money Lender Can Do

MinLaw regulates licensed moneylenders’ activities in Singapore, from writing to enforcing the laws. So, any licensed money lender in our country will have to respect the Moneylenders Act.

This document contours a series of obligations, including the licensed money lender’s responsibility to respect your:

  • Confidentiality
  • Privacy
  • Integrity

Having to comply with these obligations prevents any authorised money lender from acting violently.

But licensed money lenders aren’t usually in charge of recovering debts. Instead, they outsource this job to a debt collecting agency.

Don’t worry, though.

Even if MinLaw does not regulate them, debt collectors still have to obey the law. Besides, these agencies will follow the Code of Ethics set by the Credit Collection Association of Singapore (CCAS).

This Code of Ethics saw the light of day in 2013. Before that time, licensed moneylenders and debt collectors had a pretty bad rep. As a result, people were hesitant about taking loans from these authorised places and fell prey to Ah Long more frequently.

But reading this Code of Ethics can genuinely put your mind at ease.

Based on this document and the general law in Singapore, here’s what a licensed money lender or debt collector is allowed to do:

  • Contact your family and friends. A licensed money lender or debt collector can’t threaten or harass your family so that they’ll repay your loan. However, they can call your house and tell your wife it’s in regards to your loan.
  • Tell your boss/ colleagues about your loan. A licensed money lender/ a debt collector can also stop by your office and politely ask to see you, stating that’s in regards to your loan.

But here’s why most licensed moneylenders reach out to debt collecting agencies:

Debt collectors have excellent mediating skills. Of course, some are better than others, but you get the gist. In fact, very few debt collectors will start by calling your house when they know you’re not there.

And that’s why you shouldn’t reject their phone calls or messages.

Talk to your debt collector agent, and you’ll be surprised. They’ll present you with a loan renegotiation plan to tackle your debt, but they’ll also be happy enough to listen to your solutions.

What A Licensed Money Lender Cannot Do

Now you know that the worst thing a licensed money lender can do is drop hints to other people that you have an outstanding debt. You also understand that most legal moneylenders in Singapore won’t even go that far – at least not unless you’re rejecting their calls.

Here’s the bad news:

That Code of Ethics we mentioned above isn’t a legally binding document, and that means a handful of legal money lenders may act outside of it.

So how far can debt collectors/ licensed moneylenders go?

For example, suggesting upcoming litigation breaks that Code of Ethics if the commencement of this proceeding isn’t genuine. However, this suggestion doesn’t break the law.

Here’s what’s illegal:

1. Harassment, Threats, and Intimidation

Remember that nobody is above the law. And the law in Singapore includes the Protection From Harassment Act that you can browse here.

According to this Act, nobody can:

  • Use threats such as provoking personal injury or causing damage to your property
  • Be abusive towards you/ your loved ones
  • Insult you or your loved ones
  • Shout vulgarities

You get the gist.

Besides, if anyone threatens to harm you or your property, they can be charged for criminal intimidation according to the penal code.

And it gets better:

If someone doesn’t verbalise or act on those threats but still makes intimidating gestures – you can still report them.

2. Stalking

Stalking means:

  • Persistently and intentionally following you/ your loved ones
  • Constantly trying to be in the same places as you
  • Going to places where you’re not at but are known to frequent
  • Monitoring your movements

Stalking someone like this is illegal, especially if it’s done to intimidate or pressure you.

3. Causing Injury

Nobody is legally allowed to cause you physical harm or to ruin your physical integrity. That sort of offence is severely punished in Singapore.

So:

  • If someone wounds you or knocks you unconscious, the punishment is up to two years in prison and a $5,000 fine – or both
  • If someone causes a grievous offence (e.g., disfigurement, fracture, or dislocation), the prison sentence reaches ten years, plus a fine and caning

4. Vandalising Your Property

The Vandalism Act clearly states that painting people’s property or writing profanities is a crime. That means nobody can write “O$P$” on your door and expect to get away with it.

Debt collectors can’t even paste notices on your door, and they definitely can’t do anything more obvious like hanging banners or other embarrassing actions.

If a legal money lender or debt collector does that, they can receive a $1,000 fine.

5. Damaging or Taking Your Property

Nobody can take your things without first coming up with a Writ of Seizure and Sale, and you get that after a trial from the Singapore Courts. So no, a debt collector or licensed money lender can’t simply show up and take your assets.

If they threaten you with such a possibility, don’t be tricked.

Here’s something else that nobody can do:

Damaging your things – because that’s a penal action regulated by the Penal Code. As a result, people who destroy or damage your assets can receive a prison sentence of up to 12 months and a fine.

They don’t even have to wreck your things to get this punishment; all it takes is some damage.

6. Engaging in Unlawful Assembly

An unlawful assembly is a group consisting of at least five people that come to your doorstep mob-style to intimidate you. So no, your licensed money lender can’t show up with his buddies at two a.m. looking all buff and asking you for money.

If they do, let them know this strategy is called “unlawful assembly”, and they can face serious jail time if found guilty. And if it’s just three or four people instead of five, it can still be considered harassment or intimidation.

A Licensed Money Lender has Harassed Me. What Can I Do?

As we’ve discussed above, a licensed money lender or a debt collector can’t legally harass you or use violence against you. When you can’t repay your loan and an agent contacts you, it’s most likely they come in peace, trying to renegotiate your contract.

But, if someone ever uses intimidation tactics or outright violence against you/ your loved ones, you should:

1. Contact the Police

If you’re feeling in danger, pick up the phone and call the police or write a text if you can’t speak. The police will tell you precisely if that money lender or debt collector broke the law, plus what you should do further.

For example, you can ask for a Protection Order against the person who harassed you.

2. Contact the Credit Collection Association of Singapore (CCAS)

Contacting CCAS will help you and your legal money lender reach an accord because CCAS can help with mediation. Here’s the thing:

Your licensed money lender or the debt collector you had differences with must be members of this association for CCAS to intervene.

Unfortunately, CCAS can’t help if you borrowed money from a loan shark.

3. Negotiate a Repayment Plan

Renegotiating your reimbursement terms is a win-win solution for you and your legal money lender. Firstly, paying your debt ensures your credit rating stays good enough so that you can still use other credit facilities. By comparison, filing for bankruptcy ruins that credit rating, even though it saves you from legal proceedings.

And secondly, your licensed money lender gets their money back – which is exactly what anyone wants.

If you want to renegotiate your repayment plan, you can:

  • Come up with your strategy and discuss that with your legal money lender.
  • Ask your debt collector for assistance or get in touch with CCAS.
  • Contact Credit Counselling Singapore, a non-profit organisation that specialises in offering expert support to people fighting debt.
  • Opt for the Debt Repayment Scheme (DRS) if you owe less than $100k. However, this scheme isn’t free and will appear in your public records. Besides, you can only apply if the court recommends it, and you’ll have a maximum of five years to reimburse your loans. However, it’s a valid alternative to bankruptcy and includes all of your unsecured loans.