When you borrow money from a friend, you are likely to repay what you owe. It is the same with taking money from a legal money lender.
However, what if you are unable to pay money lender Singapore?
In most cases, most licensed money lenders will try all necessary means to ensure you repay their money. But they may be forced to take further action if you fail to repay their money.
This article will discuss how to settle licensed money lenders to whom you owe large sums of money, as well as what the law permits a legal money lender in Singapore to do if you are unable to pay money lender Singapore.
We will also talk about what licensed money lenders can’t do, the options available for you, and how credit counseling firms can help.
Factors To Consider Before You Take A Loan
Singapore’s Ministry of Law (MinLaw) warns citizens that before they take up loans, they must do their research diligently.
According to the Ministry, these some of the guidelines you should beware of before you take a loan:
- Before you go to a legal money lender for a loan, try other means of accessing a loan. You can try borrowing from close friends, family members, or relatives. Such loans usually do not attract interest. When you take a loan, you are obliged to honour the loan.
- It is important to check whether you are in a position of agreeing with the loan terms. Before you sign the loan contract with a licensed money lender, you should know exactly what the contract entails.
- There are many licensed money lenders in Singapore. Look up the list of licensed money lenders in Singapore, which is updated by MinLaw regularly. You should do a spot check with a few of them to see which one has the best terms that you will be comfortable with. Do not choose a legal money lender in Singapore because it is located close to you.
What Happens When You Are Unable To Pay Money Lender Singapore?
There will be consequences if you are unable to pay money lender Singapore. Here are three main outcomes when you fail to honour a money lender debt repayment plan:
You Will Not Be Able To Access Loans In The Future
You may not get a loan in the future if you are unable to pay money lender Singapore as the default will show up in your credit report.
While legal money lenders are not as strict as banks when it comes to checking your credit score, they do conduct thorough background checks to establish your history of handling debts.
The Moneylenders Credit Bureau’s database helps them know the various financial institutions you have approached in the past for financial help.
If your borrowing history is marred with repayment irregularities or bad debts, licensed money lenders will not give you any loans.
You May Lose Your Collateral
Unsecured loans do not require you to pledge an asset such as a property or car. However, for secured loans, you must have collateral.
In the event you are unable to pay money lender Singapore and you had listed a car or property as collateral, chances are you will lose the security.
You May Face Legal Action
If you still can’t repay the loan, the money lender may decide to go to court to seek legal redress on the matter.
And if the court deems the matter legitimate, you will be summoned to appear before a court of law to answer the charges of failing to pay a money lender.
What Licensed Money Lenders Can And Can’t Do
Under Singapore’s Moneylenders Act, there are things a licensed money lender can and cannot do under the law.
Here is a comparison table that shows this:
|What A Licensed Money Lender Can Do||What A Licensed Money Lender Can’t Do|
|Send you a letter or several letters demanding you to pay their money||Inflict physical injury|
|Try to call you at reasonable hours||Threaten, intimidate or even harass you, members of your family, or workers at home or in the office|
|Send you non-insulting text messages at reasonable hours demanding their money||Stalk you or your loved ones|
|Visit your home or office in a bid for a one-on-one talk||Vandalise, damage, or take your property unless it is an order from the court|
|Take necessary legal action against you||Resort to violence, threats or harrassment|
Options To Take If You Are Unable To Pay A Money Lender
If it becomes evident that you are unable to pay money lender Singapore, you can try different ways to solve your problem such as:
Ask Your Money Lender To Adjust The Payment Schedule
At times, the problem is not that you do not want to pay, but you just can’t afford the installments. You can resolve this.
Talk to your money lender to adjust the debt repayment plan. You can request that your money lender lower the monthly installment or extend the repayment period.
Whichever your money lender agrees to, remember that you will now be required to repay the debt for a longer period.
Do not get a fresh loan to pay for the current loan. If you do so, you would be increasing your financial problems.
Visit A Debt Counselling Center
There are a few debt counselling centers in Singapore, and you can get the full list from the Ministry of Law.
Once you find the right debt counselling agency, tell them everything they need to know. That way, trained personnel can give you the help you need.
They aim to uncover the root of your financial troubles. After they understand the problem, they can advise you on how to settle a licensed money lender.
Apply For Bankruptcy
According to the Ministry of Law, if you are unable to pay money lender Singapore, and you have tried all means to pay back the money in vain, you can apply for bankruptcy.
The condition for applying for bankruptcy in Singapore is you must have a debt of not less than $15,000, which you have not been able to pay.
If your bankruptcy application is approved, no legal money lender in Singapore will follow up with you for failing to pay its money.
Instead, you will be under the government’s Debt Repayment Scheme. If the scheme is effected, the High Court will appoint an Official Assignee, which will follow up on your case.
If you are declared bankrupt, you will not be able to leave the country.
Can The Registry Of Moneylenders Help You Negotiate With The Money Lender?
The Registry of Moneylenders does not negotiate or intervene on behalf of those who have been unable to pay money lenders.
The Registry holds that licensed moneylending is a private contract between a borrower and a money lender, thus it should be left to moneylending institutions to negotiate with their clients. There are rules on how legal money lenders can deal with such borrowers.
Seek Help Early
If you are unable to pay money lender Singapore, it is not the end of the world.
You can seek help in various ways.
For more expert advice on how to deal with the repayment of your debts, visit Credit 21.
We are a trusted licensed money lender in Singapore that offers some of the most affordable interest rates and fees. We would be more than happy to help you in any way we can.
Contact us today or apply for a loan using your Singpass now. The entire process only takes five minutes.