Knowing your rights as a debtor

Knowing your rights as a debtor when debt collectors starts knocking on the door

These days, more companies and individuals are resorting to debt collection agencies to recover what is owed to them. Professional debt collectors are legal entities engage by creditors to recover any unpaid or outstanding debts. While they are empowered with certain responsibilities to retrieve overdue debts, there is a limit to what they can enforce legally.

Here's what you want to know

Types of debts

Debts can be in the form of a personal loan. Like a study loan, a medical loan or loans from credit card purchases. It can also be from an investment gone awry or an unforeseen bad business decision by an entity.

Case study of a personal debt

Take for example the case of Mr M. When his new BTO flat was ready for collection, Mr M and his fiancée got married and used up all their savings on renovating their new home. To beautify their newlywed nest, they went on a spending spree in Courts Superstore.

Taking up Courts’ appealing flexi-plan and stretching their repayment period to 72 months. But barely 15 months into their loan, Mr M met with a road accident and was hospitalised for 24 days. He lost his job and didn’t manage to find employment after that. Since he’s the sole breadwinner, unpaid bills started to pile up like a mountain of undesired trash.

Mr M have unpaid home mortgage bills, hospitalisation bills, utility bills, as well as his Courts instalments that he could no longer service. Soon, debt collectors started harassing his family. This is a case of poor debt management and weak financial planning. It cannot be said that Mr M intentionally default on his loans or payments. However, his unfortunate circumstance does not waive him from his contractual obligations.

It’s important to note that there are many instances where an individual did not knowingly get into debts with the intention of defaulting them. We can sympathize with these people.  And this is where knowing your rights as a debtor can make a difference how you are going to cope with the challenges ahead. To find out how you can work your way out of this predicament, do check out our article about five steps you can take to becoming debt free.

Knowledge of Fair debts collection practise act

So what do you do when you are faced with such circumstances? What can you do when debt collectors start pounding on your door or harassing you in your workplace? This is where knowledge of applicable International fair debts collection practise acts can be a good reference point of what are your rights and entitlements even as a debtor.

What are debt collectors empowered to do?

As a debtor, it's important to know your rights.  Knowing your rights means you do not have to subject yourself to unnecessary duress more than you deserve. After all, you did not commit a crime or kill someone. You're just in debts. In many countries including Singapore, debt collectors are not allowed to:

1. Make an unruly scene to demand payment at your residence

In Singapore, under the penal code chapter VIII, an assembly of five or more persons with the intention of showing criminal force or commit an offence can be regarded as an unlawful assembly. More details about offences of unlawful assembly can be found here.

What it means is that if you experience harassing visitations to your home by a group of more than five collectors. If they acted menacingly or threaten you in any way physical or emotional, this could be a form of unlawful assembly, and you need not subject yourself to such harassments.

What can you do:
1) inform them to leave and ask to speak to the leader privately.
2) Seek out an agreeable settlement plan.
3) Call the police if they refuse to leave and continue to cause a nuisance to you, your family and neighbours.

2. Use of violence or force during the process of debt collection.

Physical intimidation like banging on your doors or windows loudly, smashing your flower pots or kicking any of your personal effects outside your house cannot be condoned. Hurling abuses, insults and the use of offensive language at you, or threatening to hurt you or your family if you refuse to pay should not be tolerated.

What can you do:
1) Tell them calmly to stop visiting and creating a scene.
2) Write officially to the collection agency to inform them your preferred mode of communication.
3) If all else fails, call the police and notify them of the unlawful assembly.

3. Causing undue embarrassment and distress at your workplace.

For debt collectors who engage in embarrassing you at your place of work, know that you have the right to stop them from doing so. They are not allowed to visit you at your place of work or any public or communal places without your permission.

What can you do:
1) Write formally to the agency concern and inform them to stop visiting you suddenly at your workplace without your permission.

4. Forcibly removing your possession or threatening to do so

Know that unless the court has issued a writ of seizure, no one should have the right to remove your personal belongings forcibly. Especially not debt collectors. They have a right to ask for repayment but no reasons for taking possession of whatever you own. So if they warned that they would tow away your car or padlock your homes, note that they have no rights to do so.

5. Unreasonable time of contact

They are not supposed to make nuisance calls to you at unreasonable hours. Guidelines states that collectors are expected to communicate with you only during the hours of 8 am to 9 pm. These are just guidelines. Some neighbourhood police posts are more tolerant and advice that no visitation should be allowed after 11pm. Regardless,  if you have been interrupted in your sleep at odd hours of the night, you can certainly stop them from doing so. Which includes wee hours of the morning they choose to visit you for payments.

6. Misrepresenting themselves

Impersonating themselves as attorneys, cops, court representatives or relevant authorities, etc. Utilising deceptive measures to engage you or frighten you into communication are not legally acceptable.

7. Making false claims or threats.

They cannot threaten to report your failure to make payments to credit bureaus unless reasonable time has lapsed and they have every intention to do so under their client’s instruction. (Provided their claims of debt is indeed legitimate). Threatening to sue you in court without any proper documentation or intention to do so is also not allowed.

8. Charging additional fees or surcharges above and beyond what constitute to your debt.

Debt collectors are not allowed to inflate additional costs into the collections for whatever reasons. You are not obligated to repay anything more than the amount indicated in the letter of demand by your creditors. And be sure that you ask for an acknowledgement receipt of payment each time you made a payment to them.

9. Disputing a debt

When you dispute a debt, be it partial or full, the debt collectors must cease all operation to pursue the debt until such disputes are resolved with the creditor's concern. Where disputes cannot be resolved, you can escalate the matter up to the relevant dispute resolution organisation.

10. Sharing publicly details of your debt

Collection agencies are not supposed to publicly share details of your debt to family, friends, neighbours or colleagues in general. They can seek out these people to locate you by asking for your new home address or contact numbers etc. But they are not allowed to share sensitive information about your debt such as the amount and creditors concern etc.

11. Your entitlements to more details about the debt

A collector is obligated to provide you within five days of the initial contact with information about the
a) creditor,
b) Amount owed,
c) Statement that they consider the debt valid unless you dispute the debt within thirty days.d) Statement that should you dispute the debt within thirty days by written notification, the collection agency is then obligated to provide a debt validation letter detailing the contents and breakdown of the debt.

Conclusions 

It is obviously not a pleasant experience to be faced with loan collectors. It can cause one undue stress and anxiety with sleepless nights and loss of appetite. However, it is not the end of the world.

Remember that being in debts will not land you in prison. If you’re open to communications with your creditors, willing to work out a repayment plan, chances are no one wants to harass you unnecessarily and risk getting implicated with the laws.

Know that you need not subject yourself or your family to constant harassment by debt collectors be it at your residence or place of work. You have a right to request that they do not pay you visits as long as you remain contactable.