What Happens If Personal Loan Is Not Paid In Malaysia?
If a personal loan is not paid in Malaysia, the lender may take legal action against the borrower. This could include taking them to court and seeking a judgement to repay the money owed. The court may also grant an injunction or order garnishment of wages or assets to recover unpaid amounts. Additionally, borrowers who default on their loans may be subject to penalties such as late payment fees, interest rate increases, and even having their credit score lowered, making it much more difficult to obtain credit in the future.
If a borrower fails to make payments for an extended period, the lender may also pursue debt collection agencies or assign the loan to a third-party debt collector. These agencies are empowered to take action against individuals who fail to pay their debts, such as contacting them by phone and sending letters to remind them of their obligations. Sometimes, they may even visit the borrowers’ homes to collect payment. Deb collectors may resort to legal actions such as filing lawsuits or seizing assets if all other recovery methods have been unsuccessful.
In extreme cases, borrowers who fail to repay their loans may face criminal charges. The Malaysian government has enacted legislation that allows lenders to pursue criminal prosecution for loan defaults if the unpaid amount exceeds a certain threshold. Those found guilty of defaulting on personal loans could be subject to fines and imprisonment depending on the severity of the circumstances and the amount owed. However, it is important to note that criminal action should only be taken as a last resort when all other attempts at recovering payment have failed.
Overall, borrowers must understand the consequences of not paying a personal loan in Malaysia. If payments are missed or defaulted on, the lender may take legal action against the borrower, including taking them to court and seeking a judgement for repayment of the money owed. Additionally, borrowers may face penalties such as late payment fees, interest rate increases, and their credit scores lowered. Sometimes, debt collection agencies may be assigned to pursue unpaid loans, and criminal prosecution may occur in extreme circumstances.