What happened if you default payment?

What do the moneylenders do if debtors fail to pay up? Unlike illegal loansharks, they refrain from traditional methods like splashing paint on doors and embarrassing their debtors by writing “O$P$” graffiti with names and phone numbers attached. Instead, all loan applicants are required to sign a form addressed to their employers and authorize the moneylender to claim the debt deductable from their monthly salary.
 
This way, debtors are unlikely to default by the prospect of embarrassment and humiliation in the event that the forms are sent to their employers and the possibility of losing their jobs. This carries precisely the same effect as the traditional loan shark tactics – they heap intense psychological pressure on the debtor, who has to worry about the consequences of not paying up. However this will be the last resort as causing the debtor to lose their job will make it even harder to recover the loan.
 
After all the procedure are carried, the moneylender will engage the services of a debt collection company to recover the debt. But this is an expensive option they have to pay the debt collector 50 per cent of whatever amount he manages to recover.
 
It is understood that the “debt collection companies” also adopt the usual tactics including repeated harrassment of the debtor, his neighbours and his family members. Here are some case studies taken from some forum on the website.

"Dear Sir,

I am a female age 42. I want to lodge a complaint against a Licensed Money Lender " ??? Money Lender . On the 21/04/2011, I went to ?? Credit at ??? Jurong East #??-????. I meet 2 uncivilised man called Steve and William which previously I meet at ??? Money Lender at 511 Grandlink Square #??-??. They used vulgar language to scold my mother when they threaten me to make payment.  Is this the Licensed Money Lender way of doing ?  Should I called them " LICENSED LOANSHARK."  As I've owe ??? Money Lender ( S$800.00). Before that, I've went to their office last month to plead for minimum payment as I know that I am unable to pay them. They give me terms of 11th months to S$200.00 monthly. On the 05/04/2011, this is my first payment. When I got difficulties to make first payment. They sent the Tianlong Debt collectors to my house and bang hard on the door.
They threaten to said if I dont pay on 30/04/2011, they will wait for me at my place. They also called my office for payment and used vulgar language. I've also owe some other licensed money lender, when I go their place for negotiating, they are more polite and we came out for a win-win solution. I should condem this Steve & William as barbarians or uncivilised . They must mind their speech . It is not that I dont want to pay, I cant pay S$200.00 monthly as I've too many debts to pay. I borrow money from them is for my family and children as my husband is another bastard who never take responsibility for the home.  This is my 3rd re-loan from ??? moneylender.  I hope that as Members of Singapore Moneylenders Association, you would come forward to help me settle this dispute in a win-win solution. If there is no response from your association, or no one else I could turned to,  I would bring up this matter to High Government Authority. Hope to hear from you soon . Thank you."


CaseStudy 2

"Please help. I am really stressed out. My marriage is on the verge of a breakdown, my family is in a mess. There is really no one that i can talk to.

It all happens when i started taking loans from licensed money lenders in Singapore. All went well with the weekly repayments until recently when Iras froze my bank accounts due to tax matters. I have had about 8k of working capital seized from the accounts and was not able to service the weekly repayments. I have negotiated with some of my creditors and have been able to settle the loans amicably except for others.
 
They simply would not accept the there will be a delay in the repayments or any deferments that i proposed. They continue to load the late payment charges, offset my earlier repayments at an exorbitant rate and worst, sent debt collectors to my house.
 
There was even an incident whereby a debt collector took a photograph with his mobile phone of my wife receiving the letter of demand on my behalf. (i was out at work during that time). I called up the credit company on this issue and was informed that that is a standard procedure despite the fact that i have already paid an installment the day before but was not updated in their computer system.
 
I have no qualms about them doing anything to me as i am the borrower but to do anything to my family which is an innocent party is definitely not acceptable. The hard tactic employed by the debt collectors we strongly feels tantamount to harrassment and i have lodged a police report.
 
Because of these issues, my daughters dare not stay home and my wife has suggested a divorce.
All for a 1.5k loan.
 
I have borrowed from illegal monely lenders before till they were wiped out by the government. The interest they charged is cheaper than the legalised money lenders without the acceptance fees,upfront payment and exorbitant late payment charges. But i have never felt so stressed out.
 
Of course all these information is made known to me prior my borrowing and i do not deny the fact that i am not responsible. O$P$, that i know and i do not have the intention not to pay the creditors.
 
I am on track to settle most of the debts but the continual accrued late payment charges on daily basis charged by some credit companies will not only handicap my plans but make my mission impossible.
 
I sincerely need arbitration with these hardcore credit companies. What is taken will be repaid. What they need to make will be made. All i am asking for is a deferred payment with minimal late payment charges to settle the debts amicably.
 
Besides here, please advise where else or who else can help with the mediation with the creditors.
 
Please help. On the way to a breakdown!"