What can happen to the helper (or employer) if a debt is not repaid?
The first thing to know is that employers are not legally liable to pay their domestic workers’ loans (unless they have signed as a guarantor). However, if you do start receiving calls or letters from a loan company, have a calm and open conversation with your helper right away to avoid the situation from escalating. Make sure she gets professional advice; you can refer her to us for a confidential one-to-one financial counselling session to assess her finances and identify possible solutions.
Here’s what can happen if a domestic helper misses a payment on her loan:
She can first be contacted by the loan company or collecting agents as reminders to settle the payment. Letters might be addressed to the employer’s address (even if she has only missed one payment) - but remember, this is her legal address that she can provide in Hong Kong. Also, most loan companies require the landline number of her legal address for loan applications, but they would usually not call on this number unless she defaults on a payment.
Note: Receiving letters or calls about a missed payment are not immediately a cause for alarm and can often be resolved fairly easily.
If she misses multiple payments, she might be vulnerable to more aggressive tactics from the loan company or collecting agents who might falsely threaten her with jail or threaten to inform her employers.
Note: This can be quite a stressful prospect for your helper as she could fear losing her job and source of livelihood. Encourage her to have open conversations with you about any financial worries which she feels might impact her work and refer her to Enrich for a confidential, individual financial appointment.
The loan reference and guarantor (usually also domestic workers) might be contacted too if payments are missed. Many domestic workers who sign as guarantors (sometimes without understanding what this means), are often left to pay the remainder of the loan if the borrower defaults or disappears.
Note: It’s possible that your helper might be chased for a loan for which is a guarantor, rather than the principle borrower. Many helpers sign as guarantors without understanding the legal ramifications of this.
Collecting agents might also write demand letters and send it to domestic workers’ address in their home countries, threatening family members at home too. These tactics can be very intimidating and many domestic workers may not know how to communicate with their employers about this.
If multiple payments have been missed, the loan company/collecting agent may contact the employer. In such a case, you can insist that they speak mainly to the borrower (your helper) and that you are not involved. If you are being harassed by a loan company/collecting agent, remember that terminating your helper should not be the first option, and working together to resolve the issue can result in a better working relationship.
Note: If you are contacted by a loan company, loan shark or collecting agent whose behaviour is violent or potentially a threat to you or your helper, report them to the Hong Kong Police (999).