Legal & Illegal Practices of Debt Collectors in Singapore: A Comprehensive Guide

Living expenses are constantly on the rise, and in Singapore we know that most things aren't cheap. In order to keep up with a preferred lifestyle, many individuals may find themselves reliant on credit cards, personal loans, or money lenders. This can often lead to the accumulation of debt.
If you have found yourself in debt and are being faced with an overwhelming or stressful situation, it would help to understand what practices of debt collectors are legal or illegal. In this Debtox guide, we hope to help you understand the system that is in place and how you are protected as a debtor.
What Is The Legal Framework Surrounding Debt Collection In Singapore?
Singapore has established a comprehensive legal framework to govern debt collection practices. In Singapore, under the Protection from Harassment Act no one is allowed to threaten, harass, or otherwise abuse you.
What this means is that should you have taken loans through credit cards, personal loans, or licensed money lenders, they are not allowed to harass you. The most that can be done is having a letter sent to you informing you of your late payments, and home or work visits to pass you the aforementioned letters should you be uncontactable. However, they are not allowed to create a scene in any of these situations where you may be embarrassed or what can be considered harassment.
Should they do anything beyond mailing you a notice, you can rightfully file a police report for your protection. Understanding these laws is crucial for debtors to ensure they are being managed within legal boundaries.
What Are The Legal Practices Of Debt Collectors In Singapore?
Debt collectors in Singapore are required to adhere to ethical and legal procedures. Essentially, when you are taking out a loan you should ensure that you are presented with proper documentation and met with clear communication as they explain the terms and conditions to you.
Some characteristics of legitimate debt collectors involve written notices, which should include details of the debt, and offering reasonable opportunities for the debtor to make repayments. Take note that all communication should remain professional and be void of harassment or abuse.
If you want to be sure that a money lender is legitimate and licensed, you can head over to the Ministry of Law's website for a full list of approved money lenders in Singapore.
What Are Some Illegal Practices of Debt Collectors In Singapore?
While Singapore does its best to ensure that money lenders operate within the law - unfortunately some debt collectors still engage in illegal practices.This can include but is not limited to harassment, threats, or misrepresentation of the debt owed.
If your debt collector engages in any of these behaviours, they are in violation of the law. If your debt collector reaches out to you, they must refrain from using abusive language, making excessive calls, or disclosing the total debt to third parties without official authorisation.
Additionally, debt collectors should not be encouraging you to take out new loans to pay off your existing debt.
What Are Some Consumer Rights & Protections Surrounding Debt In Singapore?
Debtors in Singapore have rights and are protected against unfair or unlicensed creditors and practices. Debt collectors must be able to provide accurate information surrounding the debt. As a debtor, you have the right to dispute the debt if you have reason to believe it is not valid. You are at liberty to report illegal practices to the relevant authorities and seek protection.
Now that you have a clearer understanding of what is permitted and what isn't, we have listed some key consumer rights and protections put in place for individuals in Singapore:
Protection from Harassment Act (POHA):
The Protection from Harassment Act (POHA) draws clear boundaries surrounding communication for debt collectors.
As mentioned earlier, creditors are prohibited from using threatening, abusive, or insulting language. They also should not engage in conduct or behaviour that causes harassment, alarm, or distress.
Consumer Protection (Fair Trading) Act:
The Consumer Protection (Fair Trading) Act (CPFTA) protects consumers from misleading practices and unfair treatment.
Creditors must provide accurate information about the debt, including the amount owed and their identity.
Right to Dispute a Debt:
As a debtor, you have the right to dispute a debt if you believe there are discrepancies in the amount claimed.
Creditors must provide evidence and details supporting the validity of the debt when requested by the debtor.
Right to Written Notification:
Creditors are required to send written notices to debtors informing them of the debt owed.
These notices should include necessary details such as the total amount owed, and the creditor's information.
Privacy Protection:
Debtors have the right to privacy in debt collection.
As mentioned, creditors are not allowed to disclose confidential details about the debt to third parties without formal authorisation from the debtor.
No Misleading or Unfair Practices:
Creditors are prohibited from engaging in misleading or unfair practices.
For example, misrepresenting the total amount owed, falsely threatening legal action, or employing deceptive tactics to coerce payment.
Cease and Desist Requests:
Debtors have the right to request that creditors cease and desist further communication.
Once a written request is made, creditors should refrain from contacting the debtor.
The exception being to acknowledge the request or inform about legal actions.
Reporting to Authorities:
Debtors can report illegal debt collection practices to relevant authorities such as the Ministry of Law or the Consumers Association of Singapore (CASE).
Credit Collection Association of Singapore (CCAS) exists to establish and enforce a code of ethics amongst credit agencies.
Reporting cases of illegal debt collection practices helps in taking necessary actions against creditors who violate regulations.
Dispute Resolution:
Consumers have access to dispute resolution mechanisms, including the Small Claims Tribunal.
The Small Claims Tribunal acts as an avenue for resolving disputes related to debts of a certain amount without incurring substantial legal costs.
Fair Debt Collection Practices:
Creditors must adhere to fair and ethical debt collection practices, treating debtors with dignity and respect.
Communication should be professional, and debt collectors should provide reasonable opportunities for the debtor to make payments.
Understanding these rights empowers individuals to manoeuvre debt collection situations confidently and safely, and it protects them from unfair and illegal practices. If debtors believe their rights are being violated, they should seek advice from relevant authorities, and pursue dispute resolution mechanisms available in Singapore where necessary.
What Are Some Tips for Avoiding Debt Collection Issues In Singapore?
Prevention is always better than cure when it comes to avoiding issues with debt accumulation and debt collectors. Individuals should aim to spend within their means and set realistic budgets which take into account their essential needs. If the individual has already accumulated debt, they should aim to proactively communicate and make repayments to creditors.
Should the total debt accrued have reached an amount that the debtor is unable to see the amount reduce, despite making monthly repayments, one should consider options like Debt Repayment Scheme. With DRS, your interest is frozen and an extended tenure is granted, making it more feasible for debtors to clear their owings to creditors.
Our Debt Consultants at Debtox will be happy to assist you in understanding whether a repayment plan is suitable for you. Do not hesitate to reach out for an obligation-free consultation with us should you like to know more.
Conclusion...
In conclusion, understanding what is legal and illegal in the practices of debt collection in Singapore is vital as a debtor looking to protect yourself. Knowing your rights and protections can help you safely navigate situations and seek help if necessary. This can also aid you in understanding the various plans and schemes available to you should you find yourself in a situation where your total debt has become seemingly unmanageable.
Categories : | Debt Freedom |
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Posted On : | 2024-02-06 |
Posted By : | Admin |