What If You Are Unable To Pay A Money Lender In Singapore?
With over 150 licensed money lenders in Singapore as per the Registry of Moneylenders, getting loans from a money lender in Singapore is quite easy – no matter if you have a good or bad credit score.
But what if you are unable to pay money lender Singapore? Whatever the reason may be, the consequences of not paying your loan back on time can be dire.
However, it is not the end.
Here is an overview of what could happen when you are unable to pay money lender Singapore and some options that are available to you.
What Happens When You Are Unable To Pay A Money Lender?
There may be endless reasons for you to borrow money from a money lender in Singapore. It could be for an emergency, paying off other debts, or even to finance your business.
No matter what the reason is, one thing never changes – you will have to pay the money back – with interest.
If you are not able to do so on time, here’s what may happen:
Your Credit Score Will Be Affected
A credit score is a representation of your creditworthiness and repayment history.
In Singapore, your credit score is a three-digit number that ranges from 1,000 to 2,000 – the higher the score, the better.
In other words, your credit score shows how likely you are to repay your debt obligations on time.
When you fail to make timely repayments to money lenders, it will have a negative impact on your credit score.
Makes It Difficult To Get Approved For Future Loans
Most financial institutions determine whether they should approve your loan application and at what interest rate by looking at your credit score.
As said, when you are unable to pay a legal money lender in Singapore, your credit score will be affected. This in turn affects your chance to be approved for future loans.
Even if you apply for bad credit loans from any legal money lender Singapore has, the money lender will do a soft credit check through the Moneylenders Credit Bureau.
This directory has details of your previous loans, unpaid debts, repayment history, and so on.
Thus, if you have a prolonged history of late payments or unpaid loans, your future loan approval will be a problem.
Loss Of Asset Produced As Surety
If the loan you were unable to pay money lender in Singapore is a secured one, then you may lose the property you have pledged as the collateral.
For secured loans, you have to pledge an asset – such as your home, car or jewellery – as collateral.
If you are not able to repay the loan, the lender has the right to seize your property and sell it to repay the outstanding debt.
Face Legal Consequences
According to the Singapore legal system, not repaying a loan on time is considered an offence. The Singapore government has put in place strict laws and regulations to oversee the activities of these money lenders.
So if you are unable to pay licensed money lenders in Singapore, you may have to face the legal consequences that come with it.
What Licensed Money Lenders Can And Can’t Do
All the legal money lenders Singapore has are regulated by the Moneylenders Act. As per this Act, all licensed money lenders must follow and abide by certain rules and regulations, regardless of the situation.
As per the rules by the Ministry of Law and Registry of Moneylenders, any legal money lender in Singapore are not allowed to do the following to borrowers:
- Causing injury of any kind
- Harassing, or threatening the borrowers or their family members
- Stalking the borrower or his or her family members
- Pestering the borrower through phone calls at odd hours
- Contacting the borrower anonymously
- Damaging the borrower’s personal property
- Using abusive language or gestures on the borrower
- Shaming the borrower on social media or in public
Here are what money lenders are allowed to do if the borrower is unable to pay on time:
- Send a Letter Of Demand (LOD) by mail
- Attempt to contact the borrower by phone at normal hours
- If there is no response, issue the LOD by visiting the borrower’s residence
- Visit the borrower’s workplace as a last resort
- Take legal action against the borrower
Options To Take If You Are Unable To Pay A Money Lender
Once you realise that you will not be able to make the repayment on time or are not sure how to settle licensed money lenders, there are a few things you can do to make things better:
Restructure The Loan
The first and foremost thing you can do when you are unable to pay legal money lenders in Singapore is to speak to them and try to restructure the loan.
You can approach the money lender for an extension of your repayment tenure or make a request for smaller monthly installments.
It is always better to negotiate with the lender rather than default on the loan as it will only worsen the situation.
Consolidate All Your Outstanding Debts
If you have more than one outstanding loan, it might become difficult for you to manage all the repayments. In this case, you can consider consolidating all your debts into a single loan.
This way, you will only have to make a single monthly repayment towards all your debts.
You can apply for a personal loan from any licensed money lender in Singapore and use the loan amount to pay off all your outstanding debts.
Once you have paid off all your debts, you will only have to focus on repaying one personal loan.
Refinance The Loan
If you are unable to pay legal money lenders in Singapore, you can also consider refinancing the loan. Refinancing means taking a new loan to repay the existing one.
This way, you can get a lower interest rate on the new loan and extend the repayment tenure.
However, taking a loan in order to repay an existing loan may put you in more debt and is not always the best option.
You should only consider refinancing if you are confident that you will be able to repay the new loan on time.
File For Bankruptcy
If you are unable to make the repayment despite all your efforts, you can consider filing for bankruptcy.
Once you do so, all your debts will be written off and you will not have to repay the money lender.
However, this should only be considered as a last resort as it comes with severe consequences and restrictions.
Filing for bankruptcy will also severely impact your credit score and make it difficult for you to take a loan in the future.
Can The Registry Of Moneylenders Help You Negotiate With The Money Lender?
The Registry of Moneylenders is an organisation that keeps a record of all licensed money lenders in Singapore.
In case of a dispute between a borrower and licensed money lender or any other negotiation with the money lender, the Registry of Moneylenders will not be able to get involved. This is because it cannot be of assistance in cases of private contracts between a borrower and money lender.
However, there are many social service agencies that you can consult to help you with debt problems with legal money lenders in Singapore.
How Credit Counselling Singapore Can Help
One such social service agency in Singapore is Credit Counselling Singapore (CCS), a non-profit organisation that helps those with serious debt problems.
It provides counselling for individuals who are heavily indebted and unable to pay debts involving banks in Singapore.
It also educates borrowers about alternative options and makes debt repayment arrangements wherever possible.
CCS also helps with negotiating debt repayment plans between borrowers and licensed money lenders.
To get assistance from CCS, you just need to submit a debt counselling request on their website with supporting documents. After you have done so, you can book a session with one of its credit counsellors.
Alternatively, you can take up its debt management webinars or courses to educate yourself on how to settle licensed money lenders and various options available.
Other Help Avenues
Apart from Credit Counselling Singapore, there are many other social service agencies in Singapore that can provide you with assistance if you are unable to pay legal money lenders.
Some of these organisations are:
- Adullam Life Counselling
- Association of Muslim Professionals (AMP)
- Arise2Care Community Services
- Blessed Grace Social Services
- One Hope Centre
- Silver Lining Community Services
To conclude, no matter what the reason for your inability to repay a licensed money lender in Singapore is, there are always options available.
You can try refinancing the loan, seeking help from social service agencies like Credit Counselling Singapore, and as a last resort, file for bankruptcy.
Whichever option you choose, make sure you take action as soon as possible to avoid legal consequences.
You should also do your best to avoid such a situation by choosing the right legal money lender and borrowing what you can repay easily.
Horison Credit is one of the trusted licensed money lenders in Singapore that can offer you loans at reasonable rates and terms.