Debt collections in Singapore
In this day and age, a growing number of debtors are absconding from their debts. Whether you're an individual, an SME or a big corporation like a bank, let's face it, the number of recalcitrant debtors is like a viral disease spreading with no visible signs of improvements.
So the question is, if you're residing in Singapore, or have businesses operating in Singapore, what do you do to recover bad debts when faced with it? For some creditors, it represents the end of the friendship. For SMEs, it could mean running into critical cash flow issues that affect the operation of your business. For even bigger corporations, the difference between a significant profit or loss reports to the stakeholders at the end of a financial year.
By now, if you have an outstanding debt of substantial amount owed, you will agree that chasing after your debtor can be mentally exhausting and time-consuming. The failure to reach your debtors can also be frustrating and leaves you with toxic feelings.
Collecting debts in Singapore
So what can you do when collecting debts in Singapore? If you decide to engage the services of a lawyer to issue a legal Letter of Demand, that might help if the debtor is still operating a thriving business. But what are the chances of them responding favourably to a legal letter if they are no longer running a profitable business? What if they are on the borderline of considering bankruptcy? What if they are in financial difficulties with an infinite line of debts?
Consequences of delaying collection
The longer you waste time not taking massive actions to recover your debts, the likelier the debtor can leave the country if they are expatriates, transfer his funds outside of the country or company or even worst, fold up his business.
Recent case in the news
Let's take the recent case of an expatriate pilot from UAE that's currently in the news. (Dec 2016). While employed as an airline pilot in the United Arab Emirates, he took up a loan with the local bank. About a year ago, he left his job and the country with what he claimed to be "unforeseen family commitments" in Thailand. And he's gone without settling his outstanding debt of more than USD$100,000. The bank in question must have sent him numerous Letter of Demand for payment, to which he may have conveniently ignored. And neither had he make reasonable efforts to reach out to the bank informing them of his departure from UAE and how he's planning to make good what he owed. Nor did he bother to notify the bank of his new correspondence address.
So what did the bank do? They engaged professional debt collectors. The debt collectors managed to sniff out the debtor's wife in Facebook and reach out to her for demands of payment. Though we do not condone everything the debt collectors did, it does produce results. The bad debt collectors made a call to the pilot just before he was about to take-off from a flight and issuing threats to him and his family in Thailand; it did in effect made him surrender an initial payment of close to USD$30,000 to the bank.
Yes, you may sympathise with the pilot for being harassed in such a manner and subjecting his wife to such humiliation in social media by debt collection agencies out on a hunt. But, you shouldn't deny that had he a) taken reasonable steps to pay back what he has owed, b) made known his new correspondence address and c) contactable numbers to the bank, he could have avoided such a predicament. End of the day, when faced with recalcitrant debtors who make no efforts to repay their debts, and on the contrary exhibit every intention to abscond from their responsibilities, the best option you have is to engage the professionals to see justice done.
What our Minister for Law has to say?
In Singapore, the majority of professional debt collecting companies do abide by the law when seeking out debtors. Check out our best practices here. In the words of our Law Minister Mr K. Shammugam, "Licensed moneylenders may take reasonable steps to recover their debts as long as they do not infringe the law. Such steps include contacting the borrower to ask for repayment and taking legal action to enforce the loan contract. Approaching a debtor at his place of employment to collect debts, whilst potentially embarrassing, does not constitute an offence."
In essence, contacting a debtor at his place of work when the circumstances deemed necessary does not constitute a crime. Our job, offering professional debt collection services in Singapore, is to ensure that borrowers continue to establish a line of communication with our clients. And update on their plans how they could return what is outstanding.
Still in doubt, whether you should engage such a service, feel free to reach out to us for a non-obligatory discussion.
And find out the top 5 reasons why you want to hire a professional debt collector here.