I am a ‘Reference’ for my friend’s loan at a finance company where I also have a loan (my payments are always on time), she got terminated a few months ago and now the finance company collectors are calling me at my employer’s home. What do I do? - Christine S., Mong Kok

Hi Christine,

Let’s start with the bad news:

1. These finance companies will continue to call you whether you like it or not.

If you willingly gave your personal details to the finance company, they can legally call you to ask for more information about your friend’s whereabouts. It can be very inconvenient and annoying, but also it may affect your job and relationship with your employer once they learn that you have provided their home address and telephone number to these companies.

2. You might have to continue paying for your friend’s loan.

This depends on whether you signed a form at the loan company placing you as a ‘Guarantor’. You should ALWAYS read the terms on the loan application, even if you are not the primary borrower. If you only agreed to become a 'Reference', the loan company would want more info about your friend; where she is, if she's coming back to HK (and if so, when), whether she still send payment even if she's back in her home country.

3. If you are comfortable with sharing this with your employer, the best course might be being honest with them and telling them about your situation.

A big percentage of migrant workers with debt choose to keep their financial standing private, and understandably so. But in your situation, as the collectors have your employer’s information, it's possible your employer might one day receive a letter or phone call from them. Although the loan company cannot legally disclose any information regarding the loan details, this might put you in a situation that is not favourable to your relationship with your employer. Although it is hard to say what your employer’s reaction would be, being honest seems to be more favourable than lying to them and potentially being caught out later.

Okay, now for the good news:

1. Provided you've signed as a 'Reference' only, they cannot legally make you pay back your friend’s loan.

If you only signed up as a 'Reference', depending on the terms stated on the application, your duty to the loan company is primarily vouching for your friend, and basically providing them with information in the event she can no longer pay for the loan. They will try their best to get some information about your friend from you. But because you said that you have taken out a loan yourself, and are paying your dues on time, it is their best interests to keep you employed and would hesitate to do something that would jeopardise your employment.

2. If you provide them with information about your friend, they should stop contacting you, for the moment.

If you cooperate with the collectors and give them the information you know about your friend (even if it's to say that you don’t have any new information than what they already have), normally they would stop contacting you until your friend starts paying again, or at least until the next payment date comes around.

3. Use your ‘good payer’ status to ask for less frequent phone calls.

Like I mentioned above, you are more important to them employed and it would not be in their best interests to get you terminated, as you won’t be able to pay them back yourself.

Here is my advice: go to the loan company in person and write them a note. Most companies will accept written statements, sometimes referred to as ‘Promissory Notes’ in the OFW loan industry. Include the information you have about your friend and also state clearly some reasonable terms about their phone calls to your employer’s house. Examples may be: to call only at specific times when your employer is not home (only if you have your employer’s permission to give their home phone number), to only call your mobile phone, and not to send letters to your employer’s address.

There are NGOs that offer financial literacy courses that would be beneficial to your financial planning. They offer a wide range of workshops and seminars that could help you with budgeting and making smart decisions about your earnings. Enrich and Uplifters are both NGOs that offer these programs. Check out our Help & Support section for more information about different organisations.