What if you are unable to pay moneylenders in Singapore?

What can happen if you are unable to pay moneylenders in Singapore

While many of us know the importance of managing our finances, we may sometimes find ourselves in difficult situations when we require extra cash to pay for emergency expenses such as hospital bills, or for unexpected circumstances such as a financial crisis in the family.

In such cases, taking a loan from a licensed moneylender can help ease our pockets in the short term.

However, it is very important to uphold financing and budgeting practices in order to repay your loan on time. If you find that you’re unable to pay moneylenders in Singapore, here’s what might happen and what you can do.

What might happen if you can’t repay your loans?

Future loans might not be approved

Even though licensed moneylenders do not take your credit score into consideration (unlike bank loans), every loan application will have to go through the Moneylender Credit Bureau (MLCB) where information such as your borrowing limit, unpaid loans and repayment history with other licensed money lenders will be accessible.

If your history is unfavourable, the money lender can reject your loan application.

Legal lawsuit against you

According to your signed agreement with your licensed money lender, they will be able to take legal actions against you to claim back what has been owed to them if you cannot repay your loan.

Lose your collaterals

If you have taken on a secured loan with a licensed money lender (secured loans require you to declare any valuable assets such as your estate or car as collateral) and in the case if you are unable to pay moneylenders in Singapore at all, you would lose your collaterals – the money lender would then have the right to seize your collaterals to recoup their losses.

What licensed moneylenders can’t do

Would money lenders be able to harass you if you can’t repay your loans?

Moneylenders are governed under the Moneylenders Act, which means there are certain regulations and laws they must abide by. Even if moneylenders hire debt collection agencies to collect the money owed to them, these agencies also have to comply with the regulations. If they fail to do so, the moneylender will have to bear any consequences of any illegal activity.

Here is a summarised breakdown of the code of conduct and good practices that moneylenders and debt collectors have to comply with.

They are prohibited from:

  1. Inflicting injury
  2. Intimidating, threatening, or harassing their borrowers and/or their family members
  3. Stalking borrowers
  4. Unlawful assembly
  5. Damaging or vandalising personal property

If you experience such harassment, here are some steps you can take:

  1. Report the moneylender to the police
  2. Make a complaint against the moneylender to the Credit Association of Singapore
  3. Make a complaint to the Ministry of Law’s Registry of Moneylenders
  4. Make a complaint to the relevant Voluntary Welfare Organisations (find the list at the bottom of the page).

What licensed moneylenders can do

If you are unable to pay moneylenders in Singapore, they will usually attempt to collect the debt through these means:

  1. Mail or email you a letter of demand
  2. Visit your home to issue a letter of demand
  3. Take legal action against you

What you can do if you can’t afford to repay your loan

Renegotiate the repayment schedule

Unlike banks, you are allowed to renegotiate the loan tenure if you are unable to pay moneylenders in Singapore. You can choose to extend your repayment deadline, but do take note that there may be extra fees or late interest charged if you do so.

Do not utilize your credit line

Paying off your loans with a credit card is not a feasible solution, as with the high interest rates of credit card loans, you actually risk incurring a bigger debt instead of clearing the loan.

Reach out to social service organisations

For support, you can get advice from these social service organisations to manage your finances and debt:

Credit Counselling Singapore*

Address: 51 Cuppage Road, #07-06, Singapore 229469

Phone Number: 6225 5227

Email: enquiry@ccs.org.sg

Website: https://ccs.org.sg/

*Note: Only when you have bank loan debts as well as debts with money lenders

Blessed Grace Social Services

Address: 16 Arumugam Road, #04-02B, LTC Building D, Singapore 409961

Phone Number: 8428 6377

Email: info@blessedgrace.org

Website: https://www.bgss.org.sg/

Here’s the full list of social service organisations you can reach out to.

File for bankruptcy

You can file for bankruptcy if you are unable to repay debts of at least $15,000. Once filed, the moneylender will not be able to take legal action against you. However, this action comes with severe consequences, as your property and assets would be sold to repay your debt. So you should only consider this as your last resort.

Do your financial planning well before taking a loan

Before committing to a loan, it is important to understand the basics of budgeting your expenses so that you don’t land yourself in debt and possibly bankruptcy.

At Elite Credit, we will provide the necessary financial planning and budgeting advice you need when you apply for a loan with us, so you don’t overcommit to what you can’t repay. Reach out to us now to find out more.

 

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