Debt collectors demand $12,000 extra for 'salary'
He owed $21,000, but was asked to pay $33,000.
The reason for the extra $12,000?
"The debt collectors said it's their 'salary'," said Mr Sherman Chang, 53, the owner of a Chinese soup stall at a foodcourt in Funan DigitaLife Mall.
"When I asked why I had to pay extra when I wasn't the one who employed them, they wouldn't explain.
"But they said they would keep coming after me if I refused."
Mr Chang had originally owed his supplier $21,000, but the two parties could not agree on how or when the debt would be paid.
The supplier then engaged debt collectors from Double Ace Associates.
On Jan 15, six collectors from the agency reportedly caused a ruckus when they turned up at the mall's foodcourt during lunchtime to demand payment.
Mr Chang claimed that the collectors damaged items at his stall, and even smashed the cash register in an attempt to get money.
"They chased our customers away and threw everything on the floor," he told The New Paper last week.
"Money that I owe, I have to pay back, I will definitely pay it back. But why should I pay the debt collectors when I didn't engage them?"
According to him, the debt collectors demanded an additional "collection fee" of $12,000, but this was reduced to $7,000 after negotiation.
Mr Chang said he agreed to pay the sum and signed the settlement with Double Ace Associates stating that he owed $28,000, as he felt his "workers' safety was on the line".
He said he has since given the debt collectors 23 cheques for $1,200 each, dated the 12th of each month, and another for $400.
The first cheque was cashed on Jan 31.
Mr Frankie Tan, the owner of Double Ace Associates, claimed that it is common practice for the debtors to pay the debt collectors on top of the debt owed.
He said: "Like a court case, the loser pays. That is just how it is."
Asked how the figures for the "collection fee" were derived, Mr Tan refused to comment, saying they had their "own method" of calculation.
TNP spoke to other debt collection companies, who said collection of payment is almost always limited to only the debt owed.
Mr Roger Rajan, 43, the owner of JMS Rogers, said: "There are many such people tarnishing the industry.
"There is no way that it is right to collect extra, especially since the debtor already has problems paying the debt."
He said collectors are paid by the client who engages them, and they take a cut from the debt recovered, and nothing extra from the debtors.
Mrs Yvonne Ho, 23, the director of Singapore Debt Collection Service, said an administrative fee is collected from the client when her firm is engaged.
"The client pays us an administrative fee which covers our manpower and transport," she said. "Upon successful recovery, we then take a commission from the debt recovered.
"But we cannot take extra money from the debtors. It is not right."
While there is no official regulation on debt collection, an association has been set up. (See report on right.)
There are also laws against harassment.
Lawyers TNP spoke to say the agreement Mr Chang signed would not be binding if made under duress.
Lawyer Louis Joseph said: "The creditors can ask for extra to cover costs, but neither they nor the debt collectors have the right to use intimidation."
He said that while it would have been a civil case initially, the use of threats and harassment to disrupt the stall's operations can cause it to become a criminal case.
"We cannot take the law into our own hands, using tactics which are sometimes worse than (those by) Ah Longs.
"The only way to collect a debt is by legal action in a court of law," he said.
Lawyer Amarick Gill said the debt collectors were not supposed to behave in such a manner, and it was clearly intimidation.
"The whole thing was engineered to cause maximum impact in a minimum period of time," he said.
"I would advise that since it was signed under duress, they should go to court if payment is demanded based on the agreement signed."
Code of conduct good for image
There is no regulatory authority for debt collectors.
But the Credit Collection Association of Singapore (CCAS) was set up by 10 collection firms last year.
A spokesman for the CCAS said they work on a "self-imposed code of conduct", which they hope other collection firms will abide by as well.
"We have introduced a code of conduct which all the members have agreed would be the industry standard," said the spokesman.
"It is CCAS' agenda to promote this among the wider community of collection professionals over time."
BEAR FULL COST
As for the payment of debt collectors, the spokesman said the common practice is for the creditor to bear the full cost of the collection process, not the debtor.
"Collection companies also work with creditors on a standard commission rate for which the age of the debt is one of the key determinants of the commission rate," she said.
"But in some rare cases, in agreements made and signed between the debtor and creditor (before credit or loan are given), some cost of the collection process may be borne by the debtor."
The spokesman said while there are different collection practices, a common standard would serve to improve the image of the industry.
"These standards ensure that professional industry-wide practices are adhered to, maintaining and delivering on the interests of all parties," said the spokesman.
"Public shaming, destruction of the debtor's assets or disruption to the debtor's business are all non-acceptable codes of conduct."