Are you behind with your loan repayments? If you are worried about your safety and your rights when a debt collector hounds you for your repayments, read on.
Who are debt collectors?
Debt collectors, or debt collecting agencies, are usually hired by banks, telecommunication companies and utility companies. Essentially, they provide debt recovery services to collect money owed from either individuals, businesses or companies in the event of refusal or late payments.
However, as regulations are lax in the field of debt collecting, problems arise when debt collectors are not tactful during the process of collecting payments. Some debt collecting agencies even go as far as harassing and intimidating the debtors to get them to pay. Do take note that debt collecting is legal in Malaysia, but only if it is undertaken by licensed debt collecting agencies. As stated by Bank Negara Malaysia, banks are allowed to hire the service of debt collecting agencies, subject to stringent conditions that the banks ensure the appointed debt collecting agents adopt good practices.
What are your rights?
Bank Negara Malaysia has set a guideline of fair debt collection practices to be followed by debt collectors. The debt recovery should be done in a manner that is fair to the debtors and includes protection of privacy of borrowers during the debt recovery process. Under the fair debt collection practices, banks that engage debt collectors must:
- Promote high standards of professionalism in the industry
- Ensure that debt collectors adopt good debt collection practices and conduct:
- must not resort to intimidation or violence
- should give their borrowers written notice
- should issue an authorisation card
- Must ensure that customer information provided to debt collectors is clear and accurate
- Adhere to relevant information and secrecy provisions.
1. You have rights to information
If a debt collector contacts you, make sure you ask for an authorisation card, the name of the debt collection company they are representing, and a written notice of your debt.
2. There is time limitations to your debt
In Malaysia, under the Limitation Act 1953, there is a time limit in which a creditor can take legal action against a debtor.. This means companies must initiate legal claims within a certain time frame. After that time frame has passed, a borrower is no longer obliged to repay their debt. The time frame is 6 years from the date of providing the loan, after which companies can no longer take any action.
For example: You take on a 7 year loan from a bank in 2017. This means you should have paid the loan off by 2024. If you don’t pay off your loan by then, banks can take legal action against you 6 years after 2024. This means, after 2030, if they did not initiate any legal action against you, they can no longer do so.
So if a debt collection agent approaches you for a debt you owe more than 6 years ago, they have no right to initiate any legal action against you for the amount owed. As for credit cards, if the amount you owe for which banks want to take action against you was from 6 years ago, banks will have no rights to do so. This is because in Malaysia the time limitations for creditors (bank) to make any claims on unpaid loan is 6 years. This will apply to all types of loan given out by bank.
3. Debt collectors cannot harass you
Under the “Fair Debt Collection Practices” guideline issued by Bank Negara Malaysia, debt collecting agents must not use improper methods or any form of harassment when contacting you. This means debt collectors agents are not allowed to use abusive language, to humiliate or intimidate borrowers.
4. Debt collectors cannot call more than 3 times
If a debt collector constantly calls you, or hounds you at your workplace, you can submit a complaint to the bank and Bank Negara Malaysia. Debt collectors are not allowed to call loan defaulters or borrowers more than three times a week. You have the right to complain if your phone has been ringing off the hook.
5. Debt collectors cannot threaten you
Debt collectors are not allowed to threaten you, or take any actions that are illegal to make you repay your debt. This includes trespassing and the use of scare tactics. They are not allowed to follow you around after work, or hang out outside your home.
6. Your information cannot be shared
The Personal Data Protection Act 709 plays a crucial role in safeguarding the interest of individuals, and it makes it illegal for corporations or even individuals to sell, share or even allow the use of your personal information data by third parties. The act comprises various rules that governs the collection, use, disclosure and care of individual’s personal data in commercial transactions. If you find that debt collecting agents are embarrassing you, or contacting your friends and family about your debt in an attempt to get you to pay, it can be considered a breach of the PDPA act.
Where can you submit complaints?
You are advised to lodge complaints with the respective bank regarding their debt collectors’ actions. If borrowers are not satisfied with the manner in which complaints were handled by banks, borrowers can then submit complaints to Bank Negara Malaysia at:
BNMTELELINK (customer contact centre)
Operating hours: 9:00am – 5:00pm (Monday – Friday)
BNMLINK (walk in customer service centre)
Bank Negara Malaysia
Ground Floor, D Block
Jalan Dato' Onn
50480 Kuala Lumpur
Operating hours: 9:00am – 5:00pm (Monday – Friday)
Finally, remember that before the debt collectors are put to work, banks would usually have provided you numerous reminders for your loan repayment. Don’t ignore a bank's letter of reminder calls. Instead communicate with the bank if you are unable to make payments. You can discuss repayment options with the bank such as loan restructuring if you face financial problems. Banks usually consider loan restructuring because they too would like to minimize the amount of non-performing loans.