Extension of support measures to help individuals facing cashflow difficulties
On 5 October 2020, the Monetary Authority of Singapore (MAS), together with the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore (FHAS), announced an extension of support measures to help individuals facing cashflow difficulties transition gradually to full loan repayments. These extended measures will progressively expire over 2021.
These measures will give individuals currently under the Special Financial Relief Programme (SFRP) loan repayment deferrals more time to resume repayments. The support measures will also be available to customers previously not under the SFRP, but who are now facing cashflow challenges.
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Help to Address an Unsecured Debt Problem
If you have been struggling to make payments to your creditors for your credit cards and other unsecured loans, you may want to consider a more comprehensive approach to address the debts.
Debt Management involves working directly or indirectly with creditors to restructure the debt to allow the borrower to manage repayments that are within the borrower's current payment capacity.
Please explore the following resources to find out more.
Credit Cards are convenient, such as being able to purchase a large ticket item without forking out a lump sum of cash. So, for a $5,000 vacation that was charged to your card, you could pay $150 when the bill arrives - the minimum amount payable if you can’t settle in full.
What happens when the outstanding amount has ballooned to $50,000? You are still expected to make at least the minimum payment, which is now $1,500.
That’s when some borrowers realise that even making the minimum payment has become increasingly difficult.
In order to work out a feasible repayment plan with creditors, you need to establish a household budget that sets aside enough money for your family’s basic and essential needs before you can determine how much you can afford for monthly payments.
The amount you can afford to repay creditors is your payment capacity.
A Debt Management Programme (DMP) is a debt repayment arrangement that is facilitated by Credit Counselling Singapore (CCS) for borrowers who are struggling to pay for basic living expenses and at the same time, make minimum payments to all his/her banks.
CCS will work with you to establish a reasonable budget for your household, determine how much you can set aside as monthly payments, and propose a repayment arrangement for your creditors’ approval.
Debt Consolidation Plan (DCP) is a debt refinancing program which offers the borrower the option to consolidate all unsecured debts (such as credit card debts and some types of unsecured loans) across different banks into a single term loan with one bank.
Certain types of unsecured debts are excluded and you must meet the eligibility criteria before banks consider your application.
If a borrower owes a debt of at least $15,000 that cannot be repaid, then either the borrower or creditor may file a Bankruptcy Application with the High Court. There are consequences to being declared bankrupt such as restrictions to travelling overseas and access to credit.
However, if one has exhausted all other options for repaying his /her debts, bankruptcy is an option for consideration.
There are a lot of misconceptions about what the Debt Repayment Scheme (DRS) is. For one, it is NOT a scheme that you can simply “apply” for when you cannot pay your creditors. It is “pre-bankruptcy scheme which is administered by the Official Assignee (OA) under the Bankruptcy Act (Chapter 20)”.
To put it simply, when you are sued for bankruptcy (or self-file to be a bankrupt), the OA checks your eligibility and assesses your suitability before placing you on the Scheme.