How to deal with a debt collector who is asking you to pay down your debt? Here is an explanation of a debt collector!
Have you ever been called more than 10 times a day by a financing company where you borrow money from?
It happens when a client fails to pay the debt on the due date. Then what a debt collector will do if a borrower is in default?
In other countries such as The US, a debt collector or collection agency works by rule, and ethical code regulated by the Fair Debt Collection Practices Act (FDCPA).
A debt collector should follow the procedures when collecting debt from a client, this includes what he can, and cannot do to a client.
As we can see in Indonesia, there is a negative stigma of debt collectors who commit violence which to some extent is true that they use force such as threat, intimidation, and terror, actions that are prohibited by FDCPA, when collecting funds from a client.
To understand better how a debt collector works, and the ethic codes that regulate his conduct, let’s see first the explanation about them.
What is A Debt Collector?
A debt collector is an agent whose main job is collecting debt from a client who fails to pay a debt or is in default.
The agent can be from a lender such as a bank, financing company, or a third party that provides a service of debt collector for its clients that is the lender.
These various types of debt collector agency work with a different set of methods in collecting a debt. And they are governed by different rules in different countries.
In the United Kingdom, the Financial Conduct Authority is used to regulate the debt collector organization where its activity is legalized by the Consumer Credit Act.
[Read Also: 6 Effective Strategies to Turn Your Debt into Zero]
When we fail to pay down debt to a lender such as a bank or other loan companies, it will send its agency or use the third party, in this case, the debt collector organization, to collect a debt.
The incompetency of debt collector service, the use of physical threat, and not knowing the proper approach according to the regulation to collect a debt are some of the reasons why physical violence, threat, or intimidation are often used by a debt collector agency that make clients become afraid, angry, or uncomfortable.
Debt Collector Agents and Their Tasks
We may think that all the debt collectors are those who come into our house and ask to pay down the debt.
However, do you know that each of the debt collectors has different tasks to do? Here are those.
A Desk Collector
When you are late to pay your monthly installment, usually you’ll get a call from someone who reminds you of your due date payment.
It is the task of a desk collector. This job includes in the category of debt collector.
Before a call, a borrower is reminded in advance via text message about her debt. A desk collector will remind you in a polite way about the due date of your payment.
Usually, you’ll be asked about the reason why you don’t pay off your debt on time. There might be a fine given as a penalty because you fail to pay the debt on time.
Then the desk collector will remind you of the consequences of not paying debt on time, or not paying at all.
This happens particularly because you haven’t paid down your debt in due date several times, or because you are in default.
A collector’s job is to remind a borrower of her duty to pay down the debt through installment in a persuasive way. A collector knows well about a borrower’s financial condition. He also will tell about the due date for a borrower to pay down her debt.
If you are in a default where you couldn’t pay all your debts or refuse to pay, there will be other debt collectors who will come to you.
Usually, he will come to your house and is able to seize your asset. This is the main task of the confiscation agent. However, he has the authority to give a lawsuit if a borrower refuses to pay off her debt.
The Ethic Codes of A Debt Collector
All these tasks of debt collectors are regulated by the ethical code.
In the US here are some actions debt collectors are prohibited to do to a borrower that is regulated by FDCPA.
- Use threat, and suing a borrower
- Use physical harm or threat to use harm in order to make a borrower pay the debt
- Illegally seize the asset of a borrower. A debt collector agency can seize assets as long as it wins the lawsuit against a borrower.
While in Indonesia, the debt collector ethic code is regulated by Bank Indonesia under an official letter-number 14/17/DASP.
The following are some ethical code of collecting funds a debt collector must obey.
- Must provide an official identity, and a letter of conduct that states the agent is legally working for a loan company. The letter of conduct and official identity are issued legally by the lender company such as a bank or other financing firms.
- Any force using violence in any form is forbidden such as threatening, physical intimidation, physical harm, or terror that can harm the borrower physically. If a debt collector commits one of these acts, a borrower has the right to report him to authorities to be processed.
- Should collect the debt directly from the borrower only, and not from her family.
- Can only collect a debt from the address of the borrower during the normal hour activity that is from 8 am until 8 pm.
So if you are failing to pay your debt or in default, don’t be afraid or worry about the debt collectors. Because they have rules, and ethical codes to deal with clients.
What to Do When A Debt Collector Commits Violence
Well, if a debt collector commits an act of violence to a debtor, he must be charged by the authorities.
As a client, you have the right to report directly the violence done by a debt collector to the authorities.
Some institutions where you could report any threat or violence acts are as the following.
#1 Bank Indonesia (BI)
Bank Indonesia’s role is to provide protection to its clients in every payment services, and it includes your debt payment. When a debt collector commits violence against you, you can tell this case to BI. Here is where to contact the office.
Online complaint form: bi.go.id/perlindungan-konsumen/form
Address: Gedung B Lantai 1 Kompleks Perkantoran BI Gambir, Jakarta.
#2 Otoritas Jasa Keuangan (OJK)
Besides BI, you can send your complaint to OJK, a government institution that monitors, and watches every financial industry in Indonesia to ensure the right of the consumers. You can contact its link below.
Online complaint form: http://konsumen.ojk.go.id/FormPengaduan
Address: Menara Radius Prawiro Kompleks Perkantoran BI Thamrin
#3 Yayasan Lembaga Konsumen Indonesia (YLKI)
YLKI is an organization that protects the right of a consumer. It receives the complaint of customers including the violent act of a debt collector. From YLKI the case will be sent to OJK or BI to be processed. Here is the contact to send your case.
Online complaint form: http://pelayanan.ylki.or.id
Address: Jl. Pancoran Barat VII/1, Duren Tiga, Jakarta Selatan.
#4 Yayasan Lembaga Bantuan Hukum Indonesia (YLBHI)
If you are threaten by a debt collector, you also can contact YLBHI, a law organization that assist people in a law case. The institutions can be found across the region in Indonesia. You can contact the institution here.
What Are the Rights of A Borrower?
As a borrower, you have the rights which are your references that when a debt collector intimidates you when collecting funds, you can report him based on these rights. Let’s see some of them.
- A customer has the right to know every banking product in detail.
- A customer has the right to receive interest or deposit based on the contract.
- A customer has the right to receive a service such as an ATM facility, and a report of a transaction that has been done.
- A customer has the right to receive original rupiah that is still valid as a tool of payment.
- A customer has the right to complain, and that complaint must be processed.
- A customer has the right to obtain compensation for the loss that is caused by the provider of goods, and services. The compensation must be given if the goods or service is different from the one in the contract offered by a bank.
In Indonesia, there is a regulation to manage, and allow a bank to collect debts directly from a customer.
Now let’s see the regulations that rule the conduct of debt collector.
- Bank Indonesia’s Letter Number 14/17/DASP June 7, 2012 on The Change of Bank Indonesia’s Letter Number 11/10/DASP about The Implementation of Card-Based Payment Instrument Activity. (“SEBI 2012”).
- Bank Indonesia’s Letter Number 16/25/DKSP 2014 on The Second Change of Bank Indonesia’s Letter Number 11/10/DASP April 13, 2009 about The Implementation of Card-Based Payment Instrument Activity.
- If a debt collector commits a violent act according to the Criminal Code, the debt collector can be punished with the insulting article, namely Article 310 of the Criminal Code, and Article 335 paragraph (1) of the Criminal Code.
A debt collector is governed by the regulation issued by Bank Indonesia in collecting debts from a borrower, also by the Criminal Code in Article 310, and Article 335 paragraph (1).
Through the regulation, a borrower as a customer can be protected by law from the act of violence committed by a debt collector.
Hopefully, after knowing about a debt collector, and how it works, you can understand what can, and can’t be done by a debt collector when collecting debt, the rights of a borrower, a law that protect the rights of a borrower, and where to report the act of violence of them.
If you have any experience of dealing with a debt collector who uses violence to collect a debt from you, let us know in the comment below.
Also, don’t forget to check your financial health through Finansialku application that you can download through iOs store, or Google Play Store for Android.
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- Admin. May 21, 2020. Dikejar Debt Collector? Pahami Cara Kerja dan Pengaduan Oknum Nakal. Rumah.com – https://tinyurl.com/y438r5n2
- Julia Kagan. May 18, 2020. Collection Agency. Investopedia.com – https://tinyurl.com/y2bskveu
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