Every year, companies can lose huge amounts of money to customers who default their payment. Therefore, it is in their best interest to invest in a way to restore the money that they owe. Most of the time, this unpleasant task is outsourced to debt collection agencies, who are chasing debtors for the money owing on behalf of the company. For example, if your credit card bills are not paid, the bank is likely to hire a debt collection agency to get the money back.
What can debt collectors do?
The trademark trick in the trade book of debt collection – sticking pigs ‘ heads— it’s probably more funny than viable these days. And you know why it’s not seen – it’s illegal. But that didn’t stop many debt collectors from resorting to frightening tactics that could include banging on your windows and doors and hanging up banners telling the world you owe money.
What distinguishes them ah long from your neighborhood is that they’re trying to abide by the law. There is also an Industry Code of Ethics established by Singapore’s Credit Collection Association that resolves disputes between debtors and collection agencies; however, the CCAS has little power to enforce the code.
- Debt Collectors Can Talk to Family and Friends In general, anything a friend or relative could legally do (if you owe them money) is also what a debt collector can do. They can stalk your Facebook, drop by the office and ask to speak with you, or call the house and ask where you are. Unfortunately, this means they can tell your wife, or children, or whoever picks up the phone that they need to talk to you about the money you owe.
- Debt Collectors Can Help Mediate and Negotiate Loan Repayment Plans While the common image of debt collectors is of thugs with bats, this is seldom the case (among legal debt collectors at least). This is because debt collectors are still subject to the Protection from Harassment Act, and can go to jail for behaving like gangsters.
As such, most debt collectors these days are more like very assertive bank tellers than triad gangsters. In fact, many have leeway to negotiate a little – if you propose an instalment plan for repayments, for example, they may take it back to their employer. Likewise, they may also be empowered to offer you various repayment solutions.
The CCAS code of conduct (linked above) even asks that debt collectors accept repayment plans, provided the debtor can prove they don’t have the funds for full repayment.
- When Demanding Repayment, Debt Collectors Cannot Gather in Groups Greater Than 5
Once the group numbers more than five (e.g. they brought along a crowd of 20 people to shout obscenities and impede your business), it counts as an illegal assembly. Call the police and they’ll be arrested.
- Debt Collectors Cannot Induce Harassment, Alarm, and Distress
The specific details are under the Protection from Harassment Act (see above). Note that causing distress can mean verbal harassment. For example, if the debt collectors threaten to harm your pet, and you are distressed by the remark, they’ve broken the law.
What can’t debt collectors do?
It’s important to note that, there is actually few specific law that regulates debt collection agencies. That means debt collectors are basically permitted to do anything, and are subjected to the same laws as a friend from whom you borrowed money. Some debt collectors might even use this to assure their client that whatever they do during the process of debt collection is in the ‘grey of laws’.
However, if you are keen to engage a debt collector, it is often necessary to scrutinize a debt collector’s actions to ensure that he does nothing illegal and put you in troubled zone. Here are some of the no-nos in debt collections:
- Unlawful assembly – If a mob of angry, burly men is sent down by the debt collection agency, the debtor may be able to call the police for unlawful assembly. Any assembly of five or more people may be convicted if one can demonstrate that their purpose is to commit an offense, including using criminal force to take any of your property, vandalize your property, or threaten you with physical harm.
- Intimidation and violence – While banging on doors and shouting vulgarities are standard debt collection practices, it is actually against the law to use threatening, abusive or insulting words or behaviour with the aim of causing alarm or threatening one (i.e. causing one to believe that immediate unlawful violence will be used). If a debt collector waves his fist in your face and threatens to another individual, he or she may call the police.
- Damaging or taking possession of one’s belongings – Many debt collectors will try to make the debtor believe they can tow the debtor’s car away or seize any possessions. In reality, they need a writ of seizure and sale from the courts in order to seize your property. One need not comply if otherwise.
- Vandalism – We all know what happened to Michael Fay. If the debt collectors spray paint your property, affix on your property any posters, advertisements or banners or steal, destroy or damage anything belonging to you, they are guilty of an act of vandalism.
- Harassment – Causing harassment, alarm or distress to another individual by using threatening, abusive or insulting words or behaviour or making any threatening, abusive or insulting communication can amount to harassment. These are good reasons for the one being harassed to call the cops
- Impersonate Government Bodies – It’s illegal for debt collectors to pretend to be government agents, such as tax agents or police officers. They are also not allowed to put up spoof sites (websites that mimic government agencies), or use fake government letterheads.
- Be sure to check with the proper authorities, if you get official-looking letters or messages about your debt. It’s unusual for government bodies to be involved in these matters.
Other things that are forbidden include:
- Unlawful stalking (following you around after work, loitering near your house, circulating compromising pictures of you)
- Threatening physical violence and brandishing a weapon (in case it needs to be said, actually hurting you is illegal)
- Defacing your property and other acts of vandalism (such as spray painting notices on your walls, or knocking your phone out of your hand)
All the above being said, when engaging a debt collector, it is vital and important to check with your agency that they do not engage any of the tactics above. If they do, they may implicate you or have your debtor file a complaint against you.