Your Dad- The Debt Collector

Your Dad- The Debt Collector

Dear Boys,

One of the many jobs your dad did was a Debt Collector, not the ‘Ah Long’ type, but the legal type, I started off this line of work with Standard Chartered Bank, that was here I met your mum. (That’s a story for another time) Back then such line of work was called ‘Customer Assistance’ and other times it is called ‘Credit Management’. Colloquially, we are known as Credit Control, Debt Collections, Collections or even ‘Accounts Receivables’.

Your dad’s desk, 2008

Lessons Learned

I spent almost 10 years there, from 1999-2009, and looking back, it was these years that I reflect back and learned a lot of lessons, in handling people, more about myself as a person, and also the unintended long tail of consequences. The more salient points first.

Money Management

People called it ‘financial literacy’, passive income and all that fancy name, for me it is plain simple, your output must not be more than your input, you cannot spend more than you earn. Of course if you are in business and investing, this sounds like an act of financial cowardice, but hey, this simple principle has ensured that no one is suing your dad for debts, or your dad is so swamped with bills he has not more money to spend on the family.

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True Story

True story, I was working with a bank and through our system, I picked up an account, and looked at the profile: Young guy, just joined the military, his credit limit- $6,000, which he has maxed out couple of months back and he is now overdue in paying his credit cards. It’s a brand new account by the way. He also have a ‘Line of Credit’ account, which is similar to a credit card except you don’t have a credit card, maxed out at $6,000 as well.

That makes his total debt with my bank $12,000.

Back then we can call our counterparts in other banks to do something of a ‘card check’, this quid pro quo industry practice back then helps us manage our debtors, exchange information to help us get a more holistic picture about how deep our debtor’s debt is, actually. This guy?

Other than my bank, he also owed, like maybe 4 to five other banks.

Which means his total debt known is about… $60,000?

For a young guy who just stepped into the working world as a SAF regular.

Let’s work the sums back, usually banks will grant you a credit limit of 2x your income. If he had the $6,000, it mean that his income is about $3,000. How much we say he owed all the banks?

Good. Luck. To. Him.

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Garnishee order (of sorts)

You boys might not heard of such a thing, but the bank is legally allowed to take the money you have in your savings/ current account to pay off your debts. This happened to one guy who was so unlucky to have this happened to him on his payday.

He owed the bank credit card debts which he didn’t pay and the account was cancelled. Once that happens, the bank will want the full payment from you. For his case, his savings/ current account was with the same bank, where he puts his salary in. Since there was money in there, we took everything and use it to pay off his credit cards, which was still not enough to clear everything.

We wipe out everything in his savings account, and it was still not enough to clear his credit card debts.

He called in that morning, because he tried to use his savings ATM card to pay for his daughter’s medical bill, and it was decline. Of course.

There was nothing we can do as it is standard procedures, like so many debtors I’ve come across, he had tonnes of excuse, but it was sheer bad luck that we cancelled his account and took all his money at the moment he got the salary. Now he has to find other ways to tide over the month till his next pay check.

For Garnishee Order, it is actually quite technical, first the bank or creditor has to find out your payday, and execute this order, on or near your payday, of which the court can seize your salary and use it to pay the banks. and the next pay check, the banks have to do it all over again.

Next time, I’ll tell you boys some more stories about things that has happened in the banks.

Photo by Alice Pasqual on Unsplash

My Years as a Debt Collector

My Years as a Debt Collector

Dear boys,

I held a job as a debt collector for banks in my early years as a working adult. I met your mum in my first Debt Collector job in Standard Chartered Bank. What I learned as a Debt Collector shaped me to become who I am today. There are many moment I am thankful for, lessons and experiences I learned to help me be prudent and thrifty.

Never have an unsecured debt

This is Lesson One. I was handling credit card and Personal Line of Credit debts. In lay person terms, the banks will give you a sum of money to spend, how they decide the amount you get to spend, is determined by the job you have. There is no collateral tied to it, hence the term ‘unsecured’. This is a kind of high risk, low returns, highly addictive, lifestyle gambling. And the bankers always wins.

One morning when I started my work and I remembered taking a call from a lady, which was odd. Usually, no debtors will call up the creditors early in the morning. This lady was calling in to inform me that she has declared bankrupt on her own. She even gave me her bankruptcy number. What else can the bank do? Her credit card bills was barely a month overdue and it was all over, to be written off as bad debt.

With a little more probing, we realized that she has taken a credit increase to cover her wedding expenses, which went into tens of thousands. It was about 3 times her normal limit. Usually banks would give a temporary limit increase for events such as weddings where there will be a large amount of cash transactions. The banks will expect the card member to use the monies they collected from their Ang Pows to pay off those excesses. It was a risk banks take. and usually there is no such issues. until I met this young lady. Our checks with other banks realised that she did the same for them, about another 2 more banks was duped by her into this trap.

These was before the days of a centralised system where the banks can check on a specific person’s credit history and ratings. In my time, we do call up our fellow debt collectors with other banks to trade information.

Spend within your means

Well, this is a no brainer, but like all no brainers, many people never use their brain to prevent this from happening. While there are many people talking about financial literacy, it is simply a matter of common sense. If you earn S$5,000, your spending is anything less than S$5,000. With the allure of 2 times your monthly income, your credit card limit is technically S$10,000. I have seen so many youngsters, particularly from the uniformed services, totally exhaust the credit limit. We are talking about soldiers, sailors, airmen, who earned perhaps a hypothetical S$4,000, getting credit cards and Line of Credits with a total of S$16,000 (S$8,000 for a credit card, and S$8,000 for a Line of Credit) and spend all that in a matter of 3 months. That is with one Bank, these folks usually will apply with a couple of banks and you can imagine the amount of debt this person have to bear.

Spending within your means, also means that you have the cash on hand to pay off everything you spend in your credit card. Heck, just pay in full, instead of the partial payment and let the rest of the balance roll, and incur bank charges. There are people out there who are owing the banks large amount of credit card bills, and paying a minimum; and when the bank decided sot cancel the card, and demand a full settlement, these folks, playing the rolling game, will end up paying through their noses, when their house of (credit) cards come tumbling down.

Be careful who you give your card to

This has to do with a supplementary card. You see, if you have a card, you can actually share that card usage with another person, and that person, most of the time is someone you should be close to.

There are people out there who gave their card to friends, girlfriends, boyfriends, business partners, and without a control element, these people will do you a favour and spend on your behalf. And who will the bank comes a knocking? The person who’s name is on the card, not the person you gave the card to spend on.

While it is nice to flaunt your ‘wealth’, it is basically a useless ego trip, and when you flash your card, you are not flashing wealth, you are flashing credit, flashing debt. So it is not a cool thing to give your credit card to people you like, but not too sure if they are trustworthy.

Credit Cards are like fire

We use them, these modes of payments are convenient. But they are like fire, excellent servants, poor masters. I was thankful to have spend time in a Bank’s credit collections department to learn all these, and understand the pitfalls of trying to look wealthy by getting credit cards. Your mum and I were kept prudent through these experiences and I hope you boys will be able to learn from our experiences.