What If You Are Unable To Pay A Money Lender In Singapore?

Dexter Lee December 18, 2022

What If You Are Unable To Pay A Money Lender In Singapore?

When you obtain a loan, you may face unforeseen circumstances that could hinder you from repaying the debt. Being in this situation is never easy as financial issues may arise unexpectedly, which may lead to the unending struggle of trying to repay your loan.

In Singapore, getting a loan from a licensed money lender is an easy and convenient way out of a cash crunch, but this shouldn’t be a reason for you to be careless.

Obtaining a loan requires good financial discipline and budgeting skills, and you should do everything you can to make timely payments.

If you are unable to pay money lender Singapore, you can follow this guide to find out what may happen next and the steps you can take.

What Happens When You Are Unable To Pay Money Lender Singapore

It may sound obvious, but some may forget that loans are meant to be repaid. Usually, a legal money lender in Singapore can give you some options or work out a repayment plan with you.

But if even that fails, and you have to default on your loan, it could lead to serious ramifications such as:

You May Lose Your Collateral

A secured loan is supported with collateral that you pledge to the licensed money lender. So when you obtain such a loan, it is crucial to ensure that you can repay it.

Because secured loans are backed by collateral such as a car or property, if you cannot repay the loan, the money lender could seize your collateral.

The Money Lender May Take Legal Action Against You

A loan from a money lender is considered a debt, meaning you are legally required to repay it as a borrower.

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    If you genuinely face issues with repaying your loan, a money lender is often open to offering alternatives such as loan restructuring.

    But if it finds out that you have intentionally avoided repaying your loan, you may face legal proceedings for criminal default. If the money lender takes you to court and wins the case, you have to pay the legal fees ordered by the court.

    Your Credit Report Will Be Affected

    All loans that you take become a debt and have an impact on your credit score. Banks and licensed money lenders in Singapore use credit reports to determine if they should give you a loan.

    Your credit report, which is your credit payment history, is collated across different financial institutions or lenders. If you default, this will be uploaded to the system and will not be taken down for one to three years.

    Hence, failing to repay your debts undoubtedly ruins your credit score, which means you will no longer be able to get loans from licensed money lenders or banks.

    So you need to know how to settle a licensed money lender in Singapore when you cannot pay on time.

    What Licensed Money Lenders Can Do

    The fact that you are unable to pay money lender Singapore does not mean a licensed money lender can mistreat you.

    The law does not allow licensed money lenders to engage in unlawful activities such as harassment and stalking even if you are unable to pay them.

    All legal money lenders in Singapore are regulated by the Moneylenders Act, which prohibits them from harassing borrowers.

    The Act also requires them to protect a borrower’s privacy, confidentiality, and integrity. In order to comply with these regulations, they are barred from mistreating borrowers.

    Normally, the task of recovering debts is given to debt collection agencies, which will chase you for the loan on behalf of the money lender.

    These agencies must also abide by the industry’s Code of Ethics established by the Credit Collection Association of Singapore (CCAS).

    The CCAS was established in 2013 to regulate the industry since it had gained a bad reputation. In those days, lenders would use violence or intimidation against borrowers who didn’t repay their loans.

    What Licensed Money Lenders Cannot Do

    You must have probably heard about debt collectors knocking on doors loudly and using abusive language at borrowers who can’t repay loans. These are the cases you don’t want to be part of.

    Although licensed money lenders in Singapore and debt collectors have to follow the rules set by CCAS, they are not bound by a specific law.

    But in general, licensed money lenders are not allowed to:

    Use Harassment, Threats Or Intimidation

    If a money lender or debt collector harasses or uses bad language against you, they have gone against the law stated in the Protection from Harassment Act.

    This act states that no one should use threatening or abusive language or behaviours to cause distress or alarm. If they threaten to cause you harm or destroy your property, they would be guilty of criminal intimidation.

    Cause Injury

    It is a serious crime to cause any injuries to a person in Singapore.

    If a money lender or debt collector causes any harm or injury to borrowers to the point of making them wounded or unconscious, they can get imprisoned for up to two years or a fine of $50,000 or both.

    If they cause fractures, disfigurements or dislocations, they may be jailed for 10 years or caned.


    It is a crime under the Vandalism Act to splash red paint or write swear words on a public property. If a licensed money lender or debt collector writes “O$P$” on your door, they will not get away with it.

    They are not allowed to put notices or banners on your door or any other embarrassing signages regarding the debt you owe. If a debt collector or money lender performs such actions, they can face a fine of up to $1,000.


    A money lender or debt collector is not allowed to follow or monitor the movements of a borrower as per the Protection from Harassment Act.

    Perform Unlawful Assembly

    A licensed money lender is not allowed to come looking for a borrower mob-style to ask for repayment. The law sees this as unlawful assembly and could lead to a jail term.

    Options To Take If You Are Unable To Pay A Money Lender

    If you fail to pay on time, you will be charged a licensed money lender interest rate of up to 4% per month, as per the Ministry of Law. Here are some options you can take:

    Negotiate With Your Money Lender

    It is good to negotiate with your money lender about an extension plan or refinancing your loan. But note that you may incur extra charges.

    If you’re genuine about wanting to fulfil your debt repayment, licensed money lenders are often willing to negotiate with you.

    Seek Help From Social Service Agencies

    Another alternative to help ease your debt burden is obtaining appropriate advice. There are social services in Singapore that offer advice on financial management and assist in facilitating loan repayment plans.

    Avoid Making Repayment With Credit Cards

    It is not advisable to repay your loans using credit cards. You may risk getting into serious credit card debt, particularly when you cannot pay the full amount at the end of the month.

    Also, you will be subjected to the high interest rates of credit cards. This may make it hard for you to repay your debts.

    Can The Registry Of Moneylenders Help You Negotiate With The Money Lender?

    The Registry of Moneylenders regulates and oversees the registration of money lenders in Singapore. It decides who should be on the list of licensed money lenders in Singapore.

    As such, it can revoke a money lender’s license if the money lender breaks the rules of the Moneylenders Act.

    But note that the Registry cannot negotiate with a money lender concerning your loan, as a loan is a private contract between you and the money lender.

    How Credit Counselling Singapore Can Help

    Credit Counselling Singapore (CCS) is a non-profit organisation in Singapore that offers credit counselling services that enable consumers to access financial help on debt management. Here are some of the functions of CCS:

    Helps With Debt Management

    Such talks are regularly conducted through informative online webinars to offer borrowers the necessary knowledge on consumer and business debt issues. In these talks, you can learn about various ways to deal with debt.

    Conducts Financial Counselling Sessions

    These sessions involve understanding a borrower’s situation through personalised financial help.

    This aims to help you manage your finances and find valuable solutions to your debt issues.

    Debt Management Programme

    CCS offers a debt management plan that assists borrowers by checking their payments and general progress before arriving at a full report.

    This counselling service has a special loan repayment policy with credit card companies and financial institutions, facilitating viable consumer payment processes.

    Also, CCS offers various credit counselling and financial education programmes to help and advise borrowers.

    Other Help Avenues

    Apply For Bankruptcy

    You can opt to file for bankruptcy when you are incapable of repaying debts of at least $15,000. This should be your last resort.

    This will stop your interest from accumulating. A licensed money lender will not be able to launch any legal proceedings against you until you are free from bankruptcy.

    Opt For A Debt Repayment Scheme

    Instead of filing for bankruptcy, you can apply for a Debt Repayment Scheme (DRS).

    If you apply for this money lender debt repayment plan, the lender will not be able to take any legal action against you unless it is granted permission to do so by the court. You will be required to repay your debts to your creditors after a certain period.

    Approach A Social Service Agency

    Blessed Grace Social Services is a non-profit organisation in Singapore that offers help to borrowers in distress.

    It offers debt consolidation programmes. If you need help, call the helpline provided on the website, schedule a meeting to discuss your issues, and attend weekly workshops.

    There Is Always A Way Out Of Debt

    Don’t give up if you are unable to pay money lender Singapore. Regardless of your financial situation, debts can accumulate if you don’t manage your expenditure well.

    However, it is important to seek the services of a trustworthy licensed money lender as it can help you solve your financial issues.

    A good licensed lender can help you consolidate your debts or give you a loan you can repay easily.

    So if you need a loan, talk to CreditMaster about what you need. We are a licensed money lender that offers reasonable loans even when your credit report is not good.

    Get help from our friendly loan officers or get started by applying for a loan now.


    Dexter Lee

    Born with a pen in one hand and a keyboard in the other, Dexter's been crafting words into beautiful prose since he was old enough to scribble on his walls (much to his mother's chagrin). He's a self-proclaimed pun master, often leaving his coworkers in stitches with his clever wordplay. He's been known to strike up conversations with strangers and turn their stories into captivating content that keeps readers coming back for more. Despite his unconventional approach to life and work, Dexter takes his job as a content manager very seriously. He knows that every piece of content he produces has the power to make a difference in someone's life, and he's committed to using his words for good.

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