Sustaining Business Expenses on Credit

Danny is 51 years old and works as a Private Hire Driver (PHD). He earns an income of about $57,600 a year and owed a total of $35,000 to 6 financial institutions and $90,000 to personal creditors. The main cause of indebtedness is due to business losses.

The interview:

CCS     : Can you share how you accumulated such a substantial amount of debt?
Danny : I was working as a monthly-salaried employee many years ago. About twelve years ago, I decided that maybe I start my own business hoping to earn more money and improve my livelihood. I thought that the quickest way to get my business going was to use my credit cards.

I opened my bubble tea stall in a food court. I had used credit cards to start the business and to supplement operations costs. Unfortunately, the business failed in the last year when rental cost increased to $6,000 per month. I could no longer sustain it because credit card interest had compounded, and I chalked up a total debt of more than $100,000.

CCS     : What did you do to try to pay down the debt incurred?
Danny : It was just a means to an end. I used the credit card for working capital and pay the interest when billed. This went on until I could no longer keep up with just paying the interest amount. I remember feeling very worried.

CCS     : Did you share your debt problem with anyone? If yes, who?
Danny : I shared with my spouse, relatives, and friends. We discussed how to repay the debts. My friends were supportive and willing to lend small amounts of money to me, but the amount was not enough to repay debts.

CCS     : Who prompted you to seek assistance from CCS?
Danny : It was actually the bank officers from two financial institutions (my creditors) that referred me to CCS. They told me that I could explore restructuring my unsecured debt into a repayment plan called the Debt Management Program (DMP).

CCS     : You had sufficient payment capacity to work out a DMP, which was accepted by your creditors. Were there trying moments that made you feel like giving up?
Danny :  Yes, there were times when I did feel like giving up. However, my wife encouraged and supported me. She said it is OK to be poor financially, but one must still have determination and resilience to continue to be hard working. She also asked me to take care of my health.

CCS     : What do you intend to do with the monthly instalment amount after you have completed your DMP?
Danny : I will save up and make small donations to help others. I am also very thankful and appreciative to CCS.

CCS     : Please share a word of advice to people who are facing a debt problem.
Danny : One must face reality, take action to tackle the debt problem and don’t let it affect you. Also, one must be committed to clear debts, reduce unnecessary expenses, and to buy only what is needed.

An interview with a CCS Client – This is the sixth of a series of interviews conducted with Credit Counselling Singapore’s (CCS) counselled clients on our Debt Management Programme. 

Profile of the client is presented based at the time the person approached CCS for assistance, which could be as recent as a few months ago or several years ago.  Name of the interviewed client has been changed. 

These interviews will be published on the 3rd Friday of the month.

Credit Counselling Singapore

Published 16 December 2022.