S'pore man borrows S$250,000 from licensed moneylender, ends up having to pay S$21 million due to interest & late fees

A man's S$250,000 debt owed to a licensed moneylender eventually ballooned to S$21 million due to late fees and interest charges.

To continue providing his family of five with a roof over their heads, the man sold his home to the director of the moneylending company and became a tenant in his own home.

From S$250,000 to S$21 million

According to The Straits Times (ST), the man had initially borrowed a sum of S$250,000 from a licensed moneylending company sometime between 2010 and 2011.

He was charged an interest rate of four per cent per month.

He also faced late payment interest of eight per cent per month, and was levied a late payment processing fee of S$2,500 per month for the initial loan.

In four years, the debt increased to S$3 million.

In July 2016, in order to continue providing for his family of five, the man sold his home to the director of the moneylending company for S$2.1 million.

He then signed a tenancy agreement for the house at a monthly rental of S$7,000 to S$8,500.

However, the debt continued to grow, eventually ballooning to S$21 million by 2021, ST wrote.

Director objected retrial

The man's plight came to light after he and the director ended up in district court over unpaid rental and the debtor's refusal to leave the home.

During the appeal, High Court Judge Philip Jeyeratnam found that there were grounds for further investigation and ordered a retrial to determine if there was truth in the allegation that both the loan and rental transactions contained "illegality".

“In my judgment, it shocks the conscience that borrowing S$250,000 has led to (the borrower) being indebted – through the accumulation of interest and so-called late payment fees – in the tens of millions,” the judge said, ST quoted.

The director of the moneylending company disagreed with the retrial, claiming that the debtor was "the author of his own misfortune" and that the court did not have the full picture, as well as the company's explanations for the charges.

However, the judge noted that the debtor had now made claims that the tenancy agreement was a sham and the loan facilities had to be reviewed on account of alleged fraudulent misrepresentation, deceit, or breach of statutory duties, ST wrote.

He found that it was just and right to look into how the debtor ended up selling his home to and becoming a tenant of the director.

The debtor was initially not represented by a lawyer.

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