Code of Conduct set by the Credit Collection Association of Singapore are in theory a set of rules that debt agencies must abide by. However as Yahoo Finance puts it, this isn't the same as being bound by law. They report that while many have called for laws to govern debt collecting, there currently have been no rush from the local law makers in setting any.

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Debt Collectors can act as Mediators between YOU and your Creditor

​Debt Collectors are allowed to speak to your family and friends

Debt Collectors Cannot....

What can YOU DO if they do anything illegal to you....

A Final word of advice...

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Every now and then someone will ask you for a loan. The problem with helping a "Friend" is that ever so often YOU will end up having to chase the very friend you trusted with your money....FOR YOUR OWN MONEY BACK. This can be a nightmare filled with anxiety. On one hand, there is your friendship to consider but on the other hand you are filled with frustrations knowing that he isn't even treating you fairly as a friend by honoring the loan he promised to repay. Heck! You may not even have charged him a cent of interest!

Here is some simple RULES you can follow to guarantee that any friend who needs a loan will be the one chasing after you in order to REPAY the loan he took.

Always Ask for a Collateral 

A Collateral is an object of equal or greater value which a borrower must hand to the lender in order to secure a loan. This will guarantee that in the event the borrower defaults, the lender has an object of value to liquidate in order to get the cash he loaned back.

You are the innocent party who have always managed your money well and have a small savings saved up to one day buy a home or a car. Its only right that the person who approaches YOU for the loan will incur the full risk of his actions. We personally recommend that you hold an object of value like GOLD, SILVER or any object that can be liquidated almost immediately for CASH.

For Instance, If an the lender hands over a Collateral consisting of Gold Ear Rings worth $300 in Gold value based on market price. We highly recommend lending only a sum of $200 and below. The Safe zone for a loan is always to lend no more than 2/3 the value of the collateral. This will ensure that once the dateline for the agreed payment lapses, the Gold Earrings is now YOURS. If the borrower chooses to buy it back from you it MUST be at the full price of the value of GOLD.

This will guarantee you never have to chase the borrower ever again. In fact the borrower will be under pressure to chase you and repay the loan before the dateline.

Note : Some "Friends" whom you demand a collateral from will whine about how you are not giving him the trust needed. This is a huge warning sign that he will never intend to repay the loan as he does NOT want to incur risk. Note that YOU are trusting him with your hard earned money and its only right that as a sign of goodwill he entrust you back in return with something of value. NO COLLATERAL means NO loans period. 

Always Charge Interest

By lending Money to anyone, YOU are incurring time and risk. You deserve to be rewarded. A pawn shop charges around 2% interest a month. You may as a friend choose to charge an interest of around 1 to 1.5% a month.

For instance, you lend a friend $1000 with an interest of 1% to be paid each month before the 5th of the month. As long as your friend pays the $10 each month he can continue holding the "$1000 loan". It must be clear that once the dateline lapses for any loan installment the collateral is now your property. This is called the "Interest only payment" type of loan. 

Another good method for interest payments is the "Repayment Installment method". For instance a loan of $1000 to a friend for a period of 12 months will have the following calculation method.

Loan = $1000
Tenure = 12 Months
Interest = 1% a Month
Total Interest = 12 X 1 = 12% = $120
Total Sum to be repaid = $1000 + $120 = $1120
Installment to be paid each month on the 5th = $1120 / 12 
                                                                                       = $93.33 Each month

Issue an IOU

Like any legal contract, have two copies of an IOU prepared and signed by both parties. Having two witnesses or more that are unrelated to both parties is always important. This is NOT a compulsory act as you are already holding a collateral. 

When taking over a collateral always ensure both parties understand that although this is understood to be a collateral, in legal terms you are actually "BUYING" his valuables as a used second hand goods. 

When he redeems or pays installments to repay you, he is "BUYING" back the item in question. The item is legally yours the moment money is given to him in exchange for the item and he has every right to choose to repay you and rebuy the item or let you the new owner liquidate the item as you see fit. 

Personal Loans should be fun and non risky

Now that you my dear reader have became more street smart, a new life awaits you. Loans should never be the only way money is earned as this above article is purely to protect those whose friends continuously hound them for loans. The ideas above are to ensure that you walk away the winner every time. 

As with all things in life, there is always risk involved in any transaction no matter how you try to protect yourself. With cash you can deposit it in a bank for interest payments. With collateral the risk is losing the item as unlike cash you cannot hand it to your banker. You are by your own agreement with your friend obliged to hold the item for safekeeping until such time the loan lapses and the item is yours or the item gets redeemed. As time goes by and your number of loans increase to people, so will the number of collateral that you hold. It would be wise to buy a safe to put the items. Some or many of these items will in due time have you as the proud new owner so its always wise to have  the foresight in keeping these items in the best condition possible.

All that being said and before you go off with high ambitions to become your own "AH LONG" please remember to always advocate financial literacy to people as borrowing is never a long term solution but wise money control is a skill for life.

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