Written by Team Farallon
Lianhe Zaobao 15 August 2021
About the Law
Creating mischiefs at debtors’ house, wearing mourning clothes, donning outfits printed with debtors’ photos and parading them on the streets….
New tactics of debt collection are frequently reported in the news, and some practices are blatantly “crossing the line”, causing the police to step in to investigate.
What should we do to protect our debt collection rights when lending money to someone around us?
What may happen if a collector is hired or civil action is pursued to recover a debt?
Joining us in this issue of About the Law, are Mr Nicolas Tang, managing director of Farallon Law Corporation, and Mr Jeremy Cheong, partner of I.R.B Law LLP. They will talk about the legal ways to collect debts and also the relevant do’s and don’ts.
Debt collectors don’t have any special privileges. They have to follow the law just like others. In recent years, staffs of debt recovering agencies have continuously come out with new tricks to collect debts. The lawyers interviewed believe that the formulation of new laws can help tackle illegal debt collection tactics.
In a written reply to questions from members of Parliament in April, the Minister for Home Affairs and Law, K Shanmugam revealed that the Ministry of Home Affairs was considering drafting new legislation to regulate debt collection agencies and their staffs and would announce the details in due course.
Mr Shanmugam said there are already laws in place to protect debtors from unreasonable or illegal acts such as harassment and intimidation by debt collectors.
For example, debt collectors may face criminal punishment under the Penal Code if they are involved in wounding or threatening acts. The Protection from Harassment Act also provides for criminal punishments and civil remedies over harassment acts.
If the borrowing party encounters such behaviours, he/she should report them to the police for investigation, or may consider applying for a writ of protection under the Protection from Harassment Act to stop the collector’s harassment acts.
Some collection agencies and their employees may harass debtors with many “creative” tactics, and under the existing legal framework it is difficult to get every perpetrator sued in court. Therefore, new laws should be formulated to curb illegal collection methods, says Mr Tang.
With the ever-widening spread of websites and apps, he points out, collection agencies can easily hide their identities as they harass debtors.
In one of the cases he knows, the debt collector created a fake female account on a dating app. After being paired with a man, “she” invited him to come to “her” house, the reason cited was that “she” wanted to spend time with him.
When the man arrived at the said address, it was not “her” house but instead, it was the house of a debtor who borrowed from the debt collector. The “woman” did not open the door so the man knocked on it. The “woman” claimed that she could not hear the knock on the door and asked the man to keep on knocking, who did so until the debtor could not bear the disturbance and reported it to the security of the apartment as well as called the police to arrest the clueless man.
According to Mr Cheong, sometimes even when these collection agencies have overstepped the legal boundaries, it can be misleading as some people may believe such agencies have the right to do so. “The law would help clarify and define exactly what collection agencies can and cannot do.”
Generally speaking, personal debt collection is a civil matter and the police will not get involved. Touching on the legal way to recover debt, Mr Tang says, creditors can consider hiring a lawyer to issue a letter of demand to the other party, and obtain a ruling from the court, followed by a ruling on the debtor’s assets.
The risk of hiring collectors, he points out, is that they might harass debtors and violate the law in the process.
In 2015, a group of debt collectors created mischiefs at a “Lao Huo Tang” stall in the food court of Funan DigitaLife Mall (now known as Funan) by turning off the lights to drive away customers, preventing the stall from doing business and intending to take away money from the cash register.
As we reported earlier, six collectors placed a banner in front of the stall bearing the words “debt collection under way”. In the process, the rice pot, cash register and other equipment at the stall were pushed off onto the ground, and the display board in front of the stall was smashed. The case attracted widespread attention and all six collectors were subsequently sentenced to jail.
Mr Tang cited that other illegal debt-collection methods includes swearing, locking up doors, vandalising or even cutting off electricity. In such cases, the debtor can call the police or file a lawsuit against the harassment.
Mr Cheong also cited the above case to demonstrate that debt collectors should always abide by the law and should not threaten or harass the debtors or their family members even if the debtors do not pay back the money.
If debtors can no longer bear the harassing and calls the police, the debt collectors can currently be charged for a range of offences, including harassment, unlawful assembly, being a nuisance, criminal violence or criminal intimidation, says Mr Tang.
He adds, “the applicable laws are the Protection from Harassment Act, the Vandalism Act and the Penal Code, and depending on the specific act of a perpetrator, some of the offences are arrestable.”
The Credit Collection Association of Singapore, which was formed in late 2013, has published a code of professional conduct on its website that sets out the principles that debt collectors should follow in different situations.
These include rules that its members should not use coercion to collect debt, that they should not force debtors to sell their properties or borrow further for financing, and that they should contact debtors within a reasonable time period.
The Statutory limitation for civil debt collection is six years. During the COVID-19 pandemic, creditors can consider negotiating via mediation with debtors to reach an agreement on repayment of debts in installments. In the case where a civil action is pursued to recover the debt, it should be noted that the statutory limitation period is six years.
As for the civil remedies available to creditors, Mr Tang points out that although some debtors are unable to pay off their debts immediately during the pandemic, they are willing to enter into amortisation agreements with their creditors, with both parties possibly carrying these out as small-claims business mediations.
In addition, according to the statute of limitations in the civil law, creditors of civil debts will lose the right to recover the debts if they have not taken any civil action to do so within six years of the default.
Creditors should also note that delays in taking legal action generally work against themselves, as it gives debtors time to wind up their business, sell assets or move them out of Singapore, Mr Tang reminded.
Even if the amount involved is quite small, the small claims tribunal will not handle the case if it is a purely personal loan. The court may handle the case if the amount is owed through provision of service or selling of goods.
Mr Cheong also adds that such claims could still be handled by a magistrate’s court.
Regarding how to protect the rights of debt collection of in the event of lending money to relatives or friends, Mr Cheong suggests that ideally all loan terms should be drafted and recorded by a professional and witnessed by an independent third party. “This helps to prove the terms of the loan, but in order to improve the chances of actually recovering the money, some form of loan guarantee is necessary.”
As for the IOU, he points out that while such written evidence is not a must-have, it is better to have one. The content should include information such as the amount of the loan, the terms of repayment and the identities of both parties.
In such court cases, Mr Tang adds, the burden of proof is on the claimant. So having written evidence always helps. In addition to this manner of agreement, this sort of written evidence can be letters, emails, text messages or WhatsApp communications.
In some cases, the party who borrows money may also claim that he has never received the money. In view of this, cheques, records of deductions in bank statements, as well as PayNow or transfer records, can also be helpful evidence to show that money has been transferred from the creditor’s account to the debtor’s.
本期《说法识法》邀请合盛律师事务所（Farallon Law Corporation）董事经理董智豪律师，
一般而言，个人债务追讨属于民事案件，警方不会介入。针对合法追债途径，董智豪说，债权人可考虑聘请律师向对方发出索偿信（letter of demand），并且入禀法庭取得裁决，再对债务人的资产执行裁决。
2013年底成立的新加坡信贷收账协会（Credit Collection Association of Singapore）曾在网站上发表一套专业操守准则，说明收账业者在不同情况下应依循的原则。
董智豪也补充说，在这类官司中，举证责任（burden of proof）在于索偿方，因此能有书面证据总是有利的。除了以协议形式，这类书面证据也可以是信件、电邮、短信或WhatsApp上的沟通。
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