A former gambler owed, at his lowest point, a sum of $60,000 to 18 licensed moneylenders in 2012.
Enticed by the thrill of online football betting and casinos, the sales manager, who wanted to be known only as Mr Ang, borrowed from multiple registered moneylenders to feed his gambling habit as well as to cover debts with moneylenders and even loan sharks.
While the 54-year-old has already paid off his debts by working two jobs, he said the stricter loan caps proposed in Parliament on Monday would have protected borrowers like him from overborrowing.
If passed, the changes to the Moneylenders Act will mean a person can borrow only within a set cap, regardless of how many moneylenders he goes to. Current caps apply only to loans from individual moneylenders, which means borrowers can continue to extend their loans by hopping from one firm to another.
"It was a vicious circle. I went to new moneylenders to cover existing debts with old moneylenders. I believe many borrowers are like me," said Mr Ang, who now volunteers at voluntary welfare organisation (VWO) Adullam Life Counselling, helping others in debt.
Voluntary organisations which deal with debt counselling said it is common for clients to owe multiple licensed moneylenders, and they believe the coming changes are critical in preventing people from overextending themselves.
Adullam's founder Wong Kee Soon said that of the 1,000 clients it sees a year for debt counselling, nearly all owe money to five or more licensed moneylenders.
Madam Lucy Wee, a counsellor at The Silver Lining Community Services, said 80 per cent of its 400 clients a year owe money to five or more licensed moneylenders.
Under the new caps, those with an annual income of less than $20,000 may borrow up to $3,000 from all moneylenders combined, while others may borrow up to six times their monthly income.
Caught in a similar debt cycle is an operations manager who owed about $30,000 to eight licensed moneylenders. Said the 55-year-old who wanted to be known only as Mr Lee: "Every time the due date for one moneylender came, I would borrow from another to cover the payment. None of them refused me a loan."
The proposed rules are expected to be implemented late next year, after the Bill's second reading in January.
Data from the Moneylenders Credit Bureau for loans taken between March last year and March this year shows that 610 Singapore citizen and permanent resident borrowers have an outstanding loan principal sum exceeding their respective aggregate loan caps.
Responding to queries from The Straits Times, the Ministry of Law (MinLaw) said the Registry of Moneylenders will send letters by the year end to these borrowers to advise them to reduce their debts.
The letters will contain a list of VWOs which can help in restructuring existing loans and provide financial counselling.
A second letter will be sent early next year to those who have exceeded or still exceed the caps, informing them of the impending implementation of the caps.
However, some VWOs are concerned the stricter limits might cause borrowers who hit the proposed caps to turn to loan sharks for more money.
Said Mr Wong: "We do foresee an increase of people coming to VWOs to settle their outstanding debts (after receiving letters from MinLaw). My message to them is, don't panic and don't go to the loan sharks if they need more money. There's always a way to settle it."