KUALA LUMPUR: In the 2009 romantic comedy Confessions of a Shopaholic, voracious shopper and accidental financial journalist Rebecca Bloomwood induces laughter when she tries to avoid a persistent debt collector.

In real life, being pursued by a debt collector is no laughing matter. There is a common perception that debt collectors operate like Ah Longs and act inappropriately to collect outstanding debts. M Matheevani, senior manager of the National Consumer Complaints Centre (NCCC), says it has received complaints from consumers about harassment by debt collectors, ranging from rude behaviour to demanding exorbitant payments.

Danville Lim, head of operations in Malaysia, at Milliken & Craig (S) Pte Ltd, says: “I wouldn’t be telling the truth if I were to say that debt collectors have not harassed debtors. However, we do not know whether these are even registered companies. Bigger players play by the rules,” he says.

“Calling a debtor is not fun. We get yelled at a lot. When people keep using harsh words against us, we can also lose our cool.” Milliken & Craig is a multinational debt collection agency. Its general manager, S H Chew, says professional debt collectors will not behave inappropriately.

“Nobody likes to receive a call from a debt collector. But, we see ourselves as consultants, by proposing payment instalments that can help the debtor address his debts. We take into consideration the debtor’s health, job and welfare status when proposing a solution to the lender and the debtor.

Actions like splashing red paint on the debtor’s property is definitely  something that we won’t do and it’s not something our clients want us to do.”

The collection process

When will outstanding debts be handed over to a debt collection agency?

According to S M Mohamed Idris, president of the Consumer Association of Penang (CAP), “there are no hard and fast rules as to when the debt collector will be called. A bank (or other financial institutions) will start sending letters (when a borrower defaults).”

Lim says a debt may be overdue for 30 or 90 days, or even as long as 10 years, before the bank calls the debt collector. “Most of the debts we are asked to recover are unsecured loans such as credit-card balances, personal loans and hire-purchase loans,” he says.

According to a spokesperson from Bank Negara Malaysia, financial institutions should give their defaulting borrowers at least seven days’ written notice before engaging a debt collector. This notice informs defaulters of their lenders’ attempts to recover the outstanding debts by using an external party and their intention to pass on the borrowers’ account to those external agents, if applicable.

“Borrowers must also be notified in advance if the lender changes its debt collection agency,” adds the BNM spokesperson.

Lim adds that site visits are done as a last resort. “Maybe after 10 unsuccessful phone calls, we will decide to make a site visit. Sometimes, we cannot get in touch with the debtors at all, and a site visit becomes necessary. We don’t do site visits to harass or threaten people,” he points out.

“The debt collector must show his ID and documents to prove that he is representing the bank (your lender). If he is calling you over the phone, get his number as well as that of his agency so that you can check up on him. Take note of the number of times that he has called and, if he is aggressive, tape the conversations as evidence,” says Mohamed Idris.

Debt collector Chew says he carries authorisation and supporting documents from the lenders that can be shown to the debtors.

Dealing with collectors

To work constructively with a debt collector, Chew advises, borrowers should cooperate and communicate. “If you do this, we don’t have to call you every hour. Tell us when you can pay up; we will give you some breathing space and let you pay on the stated (agreed) day.”

Lim says: “If you can’t pay us on the promised due date, let us know. In our experience, genuine debtors who can’t pay will take the time and effort to come to our office to discuss the matter. These people will not avoid our phone calls.”

Before making a payment, borrowers should verify their total outstanding debt. “Always contact the bank to get a detailed breakdown of (your outstanding) debt before paying,” says CAP’s Mohamed Idris.

This information  should be readily obtainable since “it is the responsibility of the financial service provider to provide the correct amount repayable by the borrower”, says the BNM spokesperson.

All debt repayments should be made to the financial institutions, not to the debt collection agency. “If payments are made to the debt collector, the customer should be provided with a receipt,” says the spokesperson.

“Cheque payment must be made payable to the financial service provider concerned.”

According to Lim, a genuine debt recovery agency will never ask for cash.

“They should ask you to make payment to the bank (your lender) or the client  they are representing.”

Ultimately, one still has to work towards settling the debt and there are repercussions for those who avoid paying. “Assuming you don’t settle your debt, years down the road, (when) you want to take a loan, you are likely to face problems (finding lenders) because of your poor (credit) record,” says Chew.

Making a complaint

Borrowers can lodge complaints with their lenders if they are unhappy with the behaviour of the debt collectors. “If there are disputes or dissatisfaction with the manner in which complaints are handled (by the lenders), borrowers can lodge a complaint with Bank Negara,” says the spokesperson.

Chew says Milliken & Craig records every phone call it makes to debtors.

Debtors are informed about this at the beginning, he says. “If they complain (About our behavior) to our client or the central bank, we can play the recording, so that everyone can hear our interaction.”

Consumers may also file a complaint with the Association of Banks in Malaysia (ABM), adds its executive director, Chua Mei Lin. “A police report  would be useful, but this is not mandatory. However, if the complaint is genuine, we will not hesitate to take the necessary actions.”