Unable To Pay Your Money Lender? Here’s What Debt Collectors Can & Cannot Do In Singapore

Taking out a loan can provide short-term relief, but things can quickly turn stressful if you find yourself unable to pay your money lender. Some borrowers worry about debt collectors showing up at their doorstep, and for good reason. Thankfully, Singapore has strict laws regulating what licensed money lenders and their appointed debt collectors can and cannot do.

Here’s a breakdown of your rights as a borrower, what actions count as harassment, and the steps you can take if you’re being unfairly targeted.

What Happens If You Can’t Repay A Licensed Money Lender?

First, it’s important to note that licensed money lenders in Singapore are governed by the Moneylenders Act, overseen by the Ministry of Law.

If you miss payments:

• The lender can impose late interest (capped at 4% per month) and late fees (capped at $60 per month).
• They may engage debt collectors to recover the sum.
• They may also file a civil claim in court against you if the debt remains unpaid.
• For debts above $15,000, the lender can commence bankruptcy proceedings against you.
• Defaults are reported to credit bureaus, affecting your credit report and ability to take future loans from banks or financial institutions.

What they cannot do is use harassment or violence to pressure you.

Read more: A Complete Guide to Improving Your Credit Score in Singapore

The Debt Collection Act & What It Means For Borrowers

The Debt Collection Act, which took effect in 2023, was passed to regulate the growing debt recovery industry and prevent harassment. Under the Act:

• Licensing Requirement: All debt collection agencies must be registered and licensed.
• Permissible Conduct: Licensed money lenders may contact debtors to demand repayment and send written notices if they are unable to pay.
• Prohibited Conduct: Threats, violence, property damage, public shaming, and harassment are strictly illegal.
• Criminal Penalties: Debt collectors who use intimidation, vandalism, or unlawful tactics face fines, imprisonment, or licence revocation.

In other words, debt collection is now regulated, with clearer accountability and recourse for borrowers.

What Debt Collectors Can Do Legally

If you’re unable to pay your money lender, here are actions debt collectors are allowed to take:

1. Communication: Call, email, or SMS you with repayment reminders.
2. Visits: Make reasonable visits to your home or workplace (during acceptable hours).
3. Formal Notices: Issue demand letters outlining outstanding sums and deadlines.
4. Negotiation: Propose repayment instalments or settlements.

All of these fall under lawful recovery methods.

What Debt Collectors Cannot Do In Singapore

Thanks to the Debt Collection Act, Moneylenders Act, and Protection from Harassment Act (POHA), debt collectors face strict restrictions. They cannot:

• Use Violence or Threats – e.g., physically intimidate you, threaten harm, or menace family members.
• Harass or Disturb Neighbours – e.g., shouting at your HDB block, calling at midnight, or drawing unwanted attention.
• Deface Property – e.g., “O$P$” notes, splashing paint, or damaging doors and gates.
• Shame You Publicly – e.g., contacting your employer, exposing debts on social media, or notifying relatives.
• Force Entry Into Your Home – only court bailiffs, armed with a writ of seizure, may lawfully do so.

Debt collectors who break these rules may be fined.

What To Do If You’re Harassed

If you’re facing unlawful debt collection methods, here’swhat you can do:

1. Gather Evidence – Record calls, save texts, take photos of vandalism.
2. Report To Police – Harassment and vandalism are criminal offences.
3. Get Legal & Financial Help – Consult a lawyer, or approach Credit Counselling Singapore (CCS) for repayment assistance.

Options For Debt Help In Singapore

Being unable to pay a money lender doesn’t mean your situation is hopeless. Options include:

• Debt Consolidation Plan (DCP): Merges unsecured debts from banks into one repayment loan.
• Debt Repayment Scheme (DRS): A court-administered scheme for unsecured debts ≤ $150,000.
• Credit Counselling Singapore (CCS): Offers repayment counselling and financial education.
• Bankruptcy (Last Resort): Protects you from further collection, but comes with restrictions.

Know Your Rights to Protect Yourself

Defaulting on a loan is stressful, but remember: both licensed money lenders and debt collectors must operate within Singapore’s laws. With the Debt Collection Act now in force, borrowers enjoy stronger protections against harassment and intimidation.

If you’re unable to pay your money lender, the best course of action is twofold:

1. Know your rights — and report unlawful behaviour immediately.
2. Seek debt help early — through CCS, repayment schemes, or legal advice.

That way, you can regain control of your finances without falling prey to unlawful collection tactics.

Tembusu Financial Services Can Help

Falling behind on payments often happens when loans aren’t designed with your circumstances in mind. At Tembusu Financial Services, we structure our loans to suit your unique needs and repayment ability, so you won’t be caught in a cycle of unmanageable debt.

Get in touch with us to find out more.