What If You Are Unable To Pay A Money Lender In Singapore?
Are you struggling to get adequate income to honour your monthly loan payments? This situation can worsen your relationship and reputation with your lender.
Licensed money lenders in Singapore are used to such situations and should strive to provide you with the best solution instead of harassing you.
Defaulting on a loan lowers your credit history and rating, which in turn may result in your loan applications being declined in the future. Worse, if your loan is secured, the asset, which could be your home, may be repossessed to cover the debt.
However, all hope is not lost if you find yourself in such a situation. You have options, including a money lender debt repayment plan, if you are unable to pay money lender Singapore.
In this article, we shall outline the options available on how to settle licensed money lender debts through Credit Counselling Singapore, among others.
What Licensed Money Lenders Can And Can’t Do
It is important to know your rights when it comes to borrowing from licensed money lenders in Singapore.
Unfortunately, many people are unaware of what these money lenders can and cannot do. This can lead to problems down the road, especially if you are unable to pay money lender Singapore.
Licensed money lenders are regulated by the Moneylenders Act, which protects borrowers by setting limits on licensed money lender interest rates and fees. It also outlines the process for resolving disputes.
If you are having trouble repaying your loan, the first thing you should do is talk to your money lender. Most of the time, it will be willing to work with you to come up with a repayment plan.
If your money lender is unwilling and does the following, you can file a complaint with the Registry of Moneylenders:
- Afflicts harm on you or your family
- Harasses, threaten, or intimidates you and the members of your family
- Follows you wherever you go
- Organises an unlawful gathering at or near your home
- Vandalises or causes damage to your personal property
The Registry of Moneylenders will investigate your complaint and take action if it feels the complaint is warranted. It may order the money lender to stop harassing you or cancel its operating license.
However, money lenders in Singapore can collect an outstanding debt from you by:
- Contacting you by phone and text at reasonable times
- Sending you a demand letter by mail
- Visiting your home or workplace to deliver a letter of demand
- Bringing a lawsuit against you
Options To Take If You Are Unable To Pay Money Lender Singapore
If you find yourself in a situation where you are unable to pay a money lender in Singapore, there are a few options available.
The first is to try and negotiate with the lender. Even though it may be difficult, it is worth a try.
In addition, try to work out a payment plan with the lender or negotiate for an extension of the loan period with your money lender. This restructuring will, however, attract a fee.
So when considering restructuring a term loan, do this before the subsequent loan installment is due to avoid late payment charges.
If neither of these options works and you still can’t reach an agreement with your lender, consider filing for bankruptcy if your obligations total at least $15,000.
This should be your last resort, but worth trying you’re truly unable to pay back the money you owe.
Despite the fact that a bankruptcy application prevents any lender from taking a recovery action against you, it can ruin your credit score for seven years. Hence, before taking this route, it would be a good idea to consider other options.
How Credit Counselling Singapore Can Help
Credit Counselling Singapore (CCS) is a non-profit organisation that offers free financial counselling to help heavily indebted individuals who owe banks and licensed money lenders.
CCS can help you negotiate with your creditors to pay off your debts in a more affordable and manageable way.
For starters, it can help come up with a practical debt repayment plan. Notably, this involves looking at your income, expenditure, and current financial commitments. CCS then negotiates with your creditors on your behalf to reach an acceptable agreement for both parties.
It also provides money management advice and budgeting assistance to get your finances back on track. They can also refer you to other agencies for more specialised help if necessary.
But one requirement is that you must attend a required Debt Management Info Talk after requesting an appointment for counselling. After the session and if CCS determines that you are a good fit for the plan, it will offer a monthly payment plan with a fixed interest rate.
Failure to honour the debt repayment plan can lead to termination of the agreement, after which your Official Assignee will issue a Certificate of Failure.
Can The Registry Of Moneylenders Help You Negotiate With The Money Lender?
The Singapore government implemented the Moneylenders Act and Rules, a set of legal guidelines for money lenders, to safeguard borrowers from unfair lending practices.
The Act, which serves as the cornerstone of legislation governing money lenders, was created to safeguard borrowers from dishonest lenders. It describes the workings, interest rates, possible fees, and procedures that licensed money lenders must adhere to.
However, since your loan is a private contract between the money lender and yourself, the Registry of Moneylenders cannot help you negotiate with the money lenders regarding your loans.
Fortunately, the Ministry of Law has listed some social service organisations that may be able to assist you with debt issues. Such agencies offer credit counselling services and can also help in negotiating a repayment plan.
|Name of Agency||Address/Contact Details|
|Adullam Life Counselling||151 Chin Swee Road #08-04 Manhattan House Singapore 169876
Tel no: 9423 8832
|Association of Muslim Professionals (AMP)||1 Pasir Ris Drive 4 #05-11 Singapore 519457
Tel no: 6416 3960
|Arise2Care Community Services||No. 5 Harper Road #02-01A Singapore 369673
Tel no: 6909 0628
|Blessed Grace Social Services||16 Arumugam Road, #04-02B Block D, LTC Building Singapore 409961
Tel no: 8428 6377
|Credit Counselling Singapore (only for bank loans)||51 Cuppage Road, #07-06, Singapore 229469
Tel no: 6225 5227
|One Hope Centre||8 New Industrial Road #04-04B LHK 3 Building Singapore 536200
Tel no: 6547 1011
|Silver Lining Community Services||(East) 11 Playfair Road Singapore, (West) Jurong Spring CC, 8 Jurong West St 52 Singapore 649296
Tel no: 6749 0400
Source: Ministry of Law
Other Help Avenues
Besides getting help from CCS, there are other avenues available to sort your current debt crisis, especially if you have borrowed from money lenders.
Debt Repayment Scheme
The Debt Repayment Scheme (DRS) is a government programme that allows you to consolidate all of your outstanding debts into one facility with an agreed period and installment. However, the total of the unsecured obligations and the loan amount cannot exceed $150,000.
Also, note that the DRS repayment plan is subject to a maximum period of five years. In addition, your income and expenses are used to determine your monthly payments.
After that, any legal money lender in Singapore for unsecured loans is prohibited by the DRS from taking legal action against you unless the court grants permission.
To be eligible for the DRS, you must first file for bankruptcy with the court.
Furthermore, to qualify for Debt Repayment Scheme, you must meet the below criteria:
- Your total debts are less than $150,000
- You have a job and a steady salary
- You haven’t filed for bankruptcy in the past five years
- In the past five years, you haven’t engaged in the DRS
This is the process of combining all outstanding unsecured loans, such as credit cards and some types of unsecured loans, into a single loan with a financial institution, such as a licensed money lender or bank.
Instead of numerous loan repayments to various banks, financial institutions, or licensed money lenders, you will only make one loan repayment to one financial institution each month.
The easiest and most common way is to obtain a personal loan from a money lender to pay out all other loans. The objective of this loan is to reduce the monthly payments into a single lower installment.
You can opt for a longer loan tenure to reduce the installment further. However, note that the loan may be costlier due to the increased interest-earning period.
Seek Help For Your Debts Soonest
Money lenders give loans quickly and without stringent criteria, which lures most borrowers to frequent borrowing. If you aren’t a disciplined borrower, you might find yourself with multiple and increasing debts.
In such a scenario, don’t wait for demand letters. Approaching your money lender is one way of coming up with a new repayment plan, including consolidating the debts.
However, if you are facing extreme difficulty repaying your debts, don’t hesitate to seek help from the DRS and CCS. Their services are free and confidential, and they will work with you to find the best solution for your situation.
If you are entangled in a web of debts, visit BST Credit and request for a debt consolidation facility. We will offer a new loan with affordable repayment terms and pay off your outstanding loans.