Many people get into debt because of poverty, unemployment, and emergencies. They even struggle to provide basic food and shelter for their families. Many others struggle because of bad spending habits. Once your spending increases over your income, debt piles up, you end up in a debt trap.

It is stressful and painful to get your money back from your friends, family, etc. It becomes a topic of rough arguments creating unpleasant reactions.

Businesses fail to collect debts and suffer the consequences. The main reason is that the companies are not aware of the right strategy to recover debts, nor do they have the right human resource for collection.

Singapore has special agents or agencies who collect the debt owed by individuals and companies on your behalf to retrieve money from such people or businesses. They are known as Debt Collection Agencies or Legal Debt Collectors.
What does a debt collector do?
Before you make a decision, “I will not pay the debt,” understand the consequences. Debt collectors can pursue the debtors to make the payment in many ways:

1. Legal Notification: A legal notice is a formal notice to the debtor for the recovery of money. A warning that can pursue him to make the payment fails which the legal process will occur. A legal notice also helps in making the debtor aware of the grievances of the creditor.

Legal Debt collectors can report your accounts to the credit bureau. Your credit payment history is recorded and compiled from different credit providers in the credit bureau. Many credit bureaus in Singapore, but most consumers are familiar with Credit Bureau Singapore(CBS) and Experian Singapore.

The credit bureaus in Singapore store details related to you and your credit history, for example, your first and all the credit accounts, your repayment history, the credit limit you have, the amount of credit you use, outstanding amount and records of bankruptcy, tax liens, foreclosure, and repossession.

Banks and businesses provide bureaus with consumer information. Credit bureaus depend on public court records for other information about you.

Who requires this information? Credit Bureaus provide information to employers, insurance companies, landlords, and debt collectors on requests.

2. Legal Lettering: It is one of the powerful documents. The primary purpose of a legal letter is to inform the debtor involved in the case that you have a lawyer or a law firm representing you in the case. This provides your debtor with an understanding of who or how to communicate concerning the issue. The creditor finds an attorney to send a legal letter to the debtor.

If you ignore the legal letter, there is a possibility you can get a second letter or face a formal lawsuit.

If you are thinking, why send a legal letter instead of a lawsuit, as a case can be expensive and time-consuming. It is another chance you give your debtor to comply as well. You can document a legal letter as proof of your attempt to comply if you decide to proceed with the legal lawsuit.

It is essential to get expert advice for legal notices. Lawyers can do due diligence checks, recovery checks, litigation checks, etc. They will support negotiation between the two parties if required. In Singapore, sending a Letter Of Demand varies from $100-&1000 depending on the nature of work.

3. Phone calls: Legal Debt Collectors can call you at a reasonable time legally. Debt collectors can call your job if you are not responding and even show up at the doorstep.

4. Legal Action: It is usually the final step or measure used for recovery. If the letter of demand is not successful, you can file a claim with the appropriate court. Legal actions include civil action, criminal reports, bankruptcy requests, defer of debt payment, etc.

In Singapore, the statute limitation of debt is six years. If you cannot contact the debtor in 6yrs, a debt can no longer be legally collected. When debt collectors recover the dues owed to creditors, they are typically paid a percentage of it.