Let’s say you took out a student loan some years ago and signed a watertight agreement with a lending institution. But maybe you’ve been busy or distracted and now you’ve missed making a couple of payments.
Then, a couple of days in a row, you come home in the evening to find some puzzling messages in your voice mailbox. A debt collector has called, working for his client, the loan officer, and wanting to collect the instalments that are overdue. That’s embarrassing!
But wait: it can get much worse, even turn into harassment, if a debt collector uses unscrupulous means to get that money out of you. It’s best that you know what’s legal and not legal when a debt collector comes knocking at your door.
In October 2014, a video of a group of debt collectors creating a commotion outside the home of an alleged debtor in Buangkok went viral. Even long before the incident, many other borrowers had shared their own stories about unscrupulous debt collectors in Singapore. Properly trained debt collectors are taught not to use unethical tactics.
However, the current low industry standards to allow a number of debt collectors to use methods of intimidation. While many debt collectors stay within the bounds of the law and ethical conduct, there are others who still opt to use aggressive or even illegal behaviour.
Young student borrowers with limited experience in dealing with loans may be easily intimidated by these few unprincipled collectors. If you have unsettled student debt, you need to be wary of some of the underhand methods these tricksters use.
Tricks by debt collectors to student debt collections
- Inconveniently Timed Calls
Unfair debt collectors may schedule their calls during inconvenient times such as early in the morning or late in the evening in order to pressure you. Some may call your workplace, or even talk to your Human Resources (HR) department and reveal your money woes to your colleagues.
Read also: Different Types of Loans Available in Singapore
- Aggressive Discussion
In addition to calling at inconvenient times of day, some debt collectors speak aggressively to try to intimidate you. Some may even use profanities when they call or otherwise contact you. They may also try to confront you at work or elsewhere in public and shout loudly to try and humiliate you.
Under such circumstances, you may invoke the Protection from Harassment Act, which offers civil remedies as well as criminal responses to harassment causing alarm and distress. You can read up on the Act here.
- Damage to Property
Sometimes, the aggressive discussion may escalate to a next level – actual damage to property. Much has been reported about the abhorrent ways some debt collectors do their job.
For example, some borrowers claim to have found paint splashed on their doors, or an “O$P$” sign (“Owe money, pay money”) scrawled on their walls. Some also reported that debt collectors set fire to items outside their flats to alarm and pressure them into paying.
- Unjustified Threats
Debt collectors may do some intensive research about you and come up with misleading statements to scare you. For example, they may threaten to seize specific assets such as your home, car or even a portion of your income. It is crucial that you know that student loans, along with most personal loans and credit card debts, are considered unsecured debts.
An unsecured debt is one where the loan has not been guaranteed by collateral properties such as your house or your vehicle, and thus the properties cannot be taken away if you fail to pay your monthly instalments on time.
Collectors may also threaten you with incarceration or deportation. You need to be aware that debt issues fall under civil law and not criminal law. As such, jail time is totally out of the question.
Another misleading threat that collectors may use is that they will publicise your debt and reveal your financial situation to others. Currently, there are still no specific legal frameworks in Singapore specifically defining debt collectors’ accepted practices.
Nonetheless, you may always invoke the Personal Data Protection Act to protect yourself from such unethical practices. The Act states that organisations may only collect, use or disclose your personal data with both your knowledge and consent. You can learn more about the Act here.
- Payment Allocation that Maximises Total Late Fees
If you pay less than the total amount due on the loans you hold, partial payments may be allocated proportionally, or pro rata, towards payment on all loans in your account. That means that you run the risk of becoming delinquent on each and every loan in your account.
In this case, each individual loan can be charged at least the minimum late payment fee. If you add up all the individual late fees, this practice can result in a large total of consolidated fees.
There are many more unethical tactics that debt collectors might use on owing borrowers. There is an eye-opening website for local moneylenders in Singapore where borrowers have shared some of their experiences with unethical debt collectors.
In an attempt to keep unscrupulous tactics under control, the Credit Collection Association of Singapore (CCAS) has developed a Code of Ethics for its members who carry out debt-collection activities.
If you as a borrower understand the Code of Conduct that debt collectors must abide by, and are aware of some of the tricks which unethical ones resort to, you’ll have a better chance of keeping a debt-collection situation from becoming aggressive.
Read: Understanding How Debt Affects Your Credit Score
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