Is Debt Collection Illegal?

Living within your means is perhaps the best way to go about life. This is because it avoids unnecessary tension and stress which often is caused by unwanted competition between different families and individuals. In our bid to outsmart and outperform the other, we often get into a borrowing spree. Many times the borrowing becomes much larger than what we can afford and we fall into a debt trap. While there could be many emergency situations where it may not be possible to avoid borrowing, we should try and differentiate between necessary and luxurious borrowing if one would like to put it that way.

The worst thing about borrowing is that we do not know that we have gone overboard, till we have actually done so. Banks and financial institutions often lure people into borrowing beyond the means of an individual. They are bothered about increasing the size of their retail assets in their balance sheet. However, as responsible Singaporeans we should know where to draw the line between discreet and indiscreet borrowing. We also should bear in mind that lenders are very tough an unsparing when it comes to realizing and collecting dues from borrowers whose accounts have gone bad. We will try and have a look at the rules pertaining to collection of personal debts in Singapore so that borrowers know how to handle pressure from debt collection agencies.

The Rules Are Not Clear
It would be pertinent to mention here that the rules pertaining to debt collection from the debtors’ perspective is still not very clear under the local Singaporean law. Hence many collection agencies try to take advantage of the same and harass borrowers in more ways than one. However, one thing is clear. Collection agents are permitted to collect unpaid dues provided they maintain the required professionalism and dignified behaviour. Whenever a debt goes bad, the lenders usually sell it to a collection agency for a discounted rate. The onus therefore lies on the collection agencies to find out ways and means by which they can try and recover the dues payable by the borrower. They will try all the tricks available at their disposal to see that they are able to squeeze as much as dues as possible from the borrowers. This is because they have paid big money to the banks and have purchased these bad debts. While it is not illegal to recover debts from borrowers, there are some clearly laid down and legally enforceable rules pertaining to collection of debts. As borrowers it is important to be aware of the same and here are a few useful tips which could help borrowers to handle debt collection agencies strongly and firmly.

They Should Not Indulge In Unlawful Assembly
Many collection agencies use strong arm tactics by deputing a group of five or six people to the homes and offices of borrowers. Their objective is to bully and frighten the borrowers and ensure that they pay up out of fear and intimidation. However, the borrowers can easily overcome this problem by lodging a complaint with the police station. The police have the powers to arrest these mischief mongers because it violates the various rules of the law pertaining to unlawful assembly.

They Cannot Indulge In Violence And Intimidation
While using vulgar language and banging on the doors and screaming are common practices used by many collection agencies, borrowers should be aware that it is unlawful for the collection guys to use abusive and threatening language and gestures. It could lead the borrower to believe that they are at risk of being physically assaulted. They can complain that they have been put under lot of stress and duress because of such practice. Hence if you come across a collection guy who used intimidating physical gestures, you can easily call the police and file a cause of purposed intimidation and violence.

Vandalism Is A Serious Offence
Many debt collection agencies are believed to indulge in vandalism. They are in the habit of painting the home of the borrower with some obscene writings and try to proclaim him/her to be a criminal offender which actually is not the case. Defaulting on loans is a civil offence and not a criminal offense. Hence if you find a collection agency trying to vandalize your property you are well within your right to lodge a police complaints which will be seriously taken up by the law enforcing authorities.

Damaging Property Or Buildings
Many collection agencies could try and seize your car forcefully if you have defaulted on your auto loan payments. They could also try and confiscate the various assets in your home in a bid to ensure that the unpaid loan is covered to the maximum extent possible. This is an illegal act and causing any damage to property including towing away of cars forcefully is wrong. Towing or taking away property is permitted only if the court gives sanction to it.

Harassment
Many collection agents try to harass you by causing mental and emotional stress. They may visit your place of work, or your home and use abusive, filthy and dirty language in an effort to harass you and making you pay up. This is not permitted under the law and you are within your right to seek help and protection from the police.

How To Handle Collection Agencies
There is no point in running away from the collection agencies because they will follow you and continue their efforts to make you pay up. As long as they do it professionally and within the ambits of the law, their efforts cannot be construed to be illegal. However, if they overstep their limits and do some acts which are not prescribed under the law, you should firmly stand up to their acts and never flinch or show fear. You should not hesitate to call the police. The police have no legal standing on you as a borrower unless the courts permit them to do so. You must not hesitate to sit down with your creditors and rework the entire loan and try ad stagger the payments and also reduce the interest burden. However you intention must be to pay off the dues rather than try and run away from it.