Missing loan payments is stressful enough without harassment from debt collectors on top of it. Debt collection in Malaysia now operates under specific rules from Bank Negara Malaysia’s Fair Treatment of Financial Consumers policy and the Consumer Credit Act 2025, which set clear boundaries on what collectors can and cannot do.

Whether you’re behind on credit card payments, personal loans, or Buy Now Pay Later debts, the same protections apply to you. Knowing these rights means you can tell the difference between legitimate collection and outright harassment.

What Debt Collectors Are Allowed to Do

Legitimate debt collection usually starts in a low-pressure way. Collectors may call you, send emails, or mail written notices to remind you about overdue payments. They are also allowed to send formal demand letters that state the amount owed and give a deadline for payment.

Home visits are possible, but only under strict conditions. Collectors can come to your home to deliver notices or discuss repayment only if you give permission. Without your consent or a court order, they cannot enter your property. They can explain the potential legal consequences of not paying, but they cannot enforce those consequences themselves.

The situation changes once a court judgment is obtained. If a creditor sues you and wins, the court can issue enforcement orders under the Rules of Court 2012 [PDF]. For example, a Writ of Seizure and Sale allows court officers and not private collectors to seize and sell your assets to repay the debt. Garnishee proceedings can redirect money from your bank account or salary straight to the creditor. These actions always require a court order. Private collectors have no legal authority to seize property or enforce payments on their own.

What Debt Collectors Cannot Do To You

Under Bank Negara Malaysia’s guidelines, collectors must avoid harassment and excessive contact. They cannot use abusive language, make threats, or try to embarrass or intimidate you. Your debt is between you and your creditor, so collectors should deal with you directly rather than contacting third parties like your employer, neighbors, family, or friends.

Collectors are also prohibited from any form of physical harassment. They cannot follow you, wait outside your home, block your entry, trespass on your property, or threaten immediate arrest or seizure of your belongings without a court order. They do not have the legal authority to carry out any of these actions themselves.

Debt Collectors Now Face Real Penalties

The Consumer Credit Act 2025, passed by Parliament in July 2025, brings debt collection under proper regulation for the first time. Debt collection agencies must register with the Consumer Credit Commission to operate legally. Running a collection business without registration carries penalties up to RM5 million or five years imprisonment.

The Act prohibits harassment, coercion, and using undue pressure when collecting debts. Collectors must protect your personal information according to the Personal Data Protection Act 2010. The Commission can investigate complaints, impose fines, suspend or revoke licences, and ban individuals from the industry for up to five years.

Verify Who You’re Actually Dealing With

If someone claiming to be a debt collector reaches out, don’t just take their word for it. First, ask to see their authorisation card, which should show the agency’s name and proof that they are working on behalf of your creditor. Also, request a written notice that clearly shows the debt amount, identifies the original creditor, and explains what you supposedly owe.

Before making any payment, verify all the details directly with your creditor. Call the bank or lender using the phone number on your original loan documents, not the one the collector gives you. This way, you can confirm that the agency is actually hired by your creditor and that the debt amount matches their records.

When you do pay, use only official channels that you have personally verified with the creditor. Never hand over cash directly to a collector who comes to your door. If paying by bank transfer, double-check that the account belongs to the creditor or their authorised collection agency. Keep in mind that scammers pretending to be debt collectors are common, and they rely on fear to make people pay without checking first.

Make sure to keep copies of all communications, written notices, and payment receipts for your records.

Check If Old Debts Are Still Enforceable

Most debt claims must be filed within six years, as stated in the Limitation Act 1953.  This means creditors have six years from the date a payment was due to take legal action. After that period, the debt becomes statute-barred and can no longer be enforced through the courts.

There is an important exception. If you acknowledge the debt in writing or make even a partial payment, the six-year period resets. This gives the creditor another six years to take legal action starting from the date of your acknowledgment or payment.

If a collector contacts you about a debt from seven or eight years ago, check the dates carefully before responding or admitting anything. Collectors may still try to collect on statute-barred debts, but they cannot sue you or obtain a court judgment. Be cautious, because even a simple statement like “yes, I owe that” could restart the clock.

Negotiation Tips To Avoid Stress

Many people assume that once debt collectors contact you, there’s no room to negotiate, but that’s not true. Collectors often have the authority to accept reduced payments or longer timelines, because creditors often prefer getting something back rather than spending months in court.

Start by putting together a realistic payment plan that reflects what you can actually afford, not just what looks good on paper. Be honest about your financial situation and provide supporting documents, such as recent pay slips, bank statements showing your monthly expenses, and details of other debts you are managing. Write out your proposal and keep copies of everything.

The collector may counter with higher payments or a shorter timeline. Negotiate back and forth until you reach terms you can realistically stick to. Always get the agreement in writing before making any payments. The written agreement should clearly state the total amount, the payment schedule, whether interest will continue to accrue, and confirmation that following this plan will stop any further collection action.

How To Report Harassment

If a debt collector harasses you, start by filing a complaint with the bank or creditor that hired them. Financial institutions are responsible for the behaviour of their collection agents and must investigate complaints. Most banks have dedicated complaints units you can contact.

If the bank doesn’t resolve the issue, escalate the matter to Bank Negara Malaysia through BNMLINK. You can call 1-300-88-5465 or submit your complaint online. Make sure to include all documentation: the collector’s name and company, the dates and times they contacted you, details of what happened, and copies of any threatening letters or messages.

For issues with non-bank credit providers, such as BNPL services, you can report to the Consumer Credit Commission once it begins operation in early 2026. During the transition period, Bank Negara Malaysia still handles complaints about financial service providers and their collection agents.

If a collector trespasses on your property, threatens you, or commits any other criminal act, file a police report immediately. Bring all your documentation with you. Physical threats and trespassing are not only regulatory violations, they are criminal offences.

Staying In Control

Dealing with debt collectors can be stressful, but understanding your rights helps you handle the situation with confidence.  

Document everything if you face harassment and report the collector to your creditor or Bank Negara Malaysia as needed. For older debts, check whether they are still within the limitation period before acknowledging or paying anything.

If you’re managing multiple debts or feel overwhelmed, reach out to AKPK. Their counsellors can help you work out repayment plans and negotiate with creditors on your behalf.

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