The COVID-19 crisis presents significant challenges to millions around the world and vulnerable communities, such as migrant domestic workers, are particularly impacted. If you are one of the 400,000 domestic workers in Hong Kong, whose economic stability has been jeopardised this year, we’re here to help.
Are you being asked to send additional money home and considering taking out a loan to do so? Is your loan agency threatening you because lockdown is preventing you from leaving your home to repay an existing loan? By taking a good look at the problems you face and carefully considering your options, you can find ways to move forward.
Supporting family overseas
Your family at home can’t work because of the COVID-19 lockdown, which means you have to send them a much higher remittance. Should you take a loan? The first thing to do is to stop for a minute and manage your emotions. This is a stressful time, but it’s important to take a moment to breathe so that you can study your options calmly. Ask yourself, is the higher remittance amount reasonable?
Sometimes we send home a majority of our salary because that’s what we believe we should do, but before you start sending more, ask whether the whole amount is needed. Be transparent and realistic with your family about your worries. Can they cut down on unnecessary expenses? Being honest now can avoid misunderstandings later. If you do need to send the higher remittance, can you cut down other costs? Monitor your daily expenses and make adjustments where you can (for example, opt for free activities or to spend less on your day off). Also consider signing up with less costly remittance companies – cable charges and foreign exchange costs add up.
If you definitely do have to take out a loan, explore several options and choose a loan agency you feel comfortable with and that offers fair terms. Do not borrow from unlicensed money lenders or friends as that can leave you unprotected.
Before signing a loan, ask yourself: Is the loan for a ‘need’ or a ‘want?’ Is the lender licensed? (Unlicensed money lenders give illegal loan terms.) Will I receive certified documents (contracts, receipts, statements) for my records? Do I understand the loan terms? Can I afford the monthly repayment and late payment fees? Will the lender keep my passport? (It is illegal for anyone to do this except for the authorities.)
When taking out a loan, have a strict repayment plan in place from the very beginning and stick to it – avoid falling into a debt cycle. You could also try to avoid sending the entire remittance in one go. Reassess it every week or month, based on your family’s needs – remember this is extra money on top of your regular remittance. And make sure your family spends your hard-earned money responsibly, for example, ask for receipts for major expenses. Identify one trusted person to manage the cash flow.
Making loan repayments
The current situation is preventing you from leaving the house to repay your loan, and the loan agency is threatening to call your employer.What can you do? First thing’s first: If the loan agency’s behaviour is violent or potentially a threat to you or your employer, report them to the Hong Kong Police (999). Know that harassment is not legal. Keep calm and do not let insults or threats put you down. When tackling this problem, the most important thing to remember is to communicate! Call the lending company and explain your situation clearly and confidently.
Ask them what your options are. Would they consider extending the grace period without penalty? Can they suggest other repayment options which don’t require you to leave home, such as a bank or digital-app transfer? Note the full name of the person you’re talking to and make a record of any new agreement. Put it in writing immediately over email or WhatsApp with the company. You have the right to request an alternative payment plan if you need one.
Another option, if you feel comfortable, is to talk to your employers about your financial plans and difficulties. Explain that you need to leave home on certain days in order to make your loan repayment. It may be hard for you to open up to your employers about your financial difficulties but doing so now can prevent a bigger issue if the loan agency contacts them. If the agency contacts your employers before you speak to them, your employers might understandably be scared and misunderstand the situation. Be open and honest. Assure them that you are seeking a solution, so that you can continue to focus on your work. This might help clear up any misunderstanding and also help them feel more comfortable in communicating with you about this issue.
A final option is to ask a trusted friend if she could help you make the loan payments. But manage this carefully, for example, insist on receiving receipts immediately by WhatsApp.
Enrich HK is an award-winning Hong Kong charity providing financial and empowerment education to migrant domestic workers. For a free, confidential one-to-one financial counselling session and to learn about the courses on offer, visit www.enrichhk.org. If you have a question you would like to see answered on this page, email [email protected].
Tags: Help Line