Cannot Deal with Loan instalments? Listed here are 3 Legal Avenues You are able to Use For Managing Debts

Nobody wants to maintain a situation where they can't meet their debt repayment obligations, since this can certainly lead to a downward spiral, no because of additional fees and additional interest charged.

In such situations, it may be helpful to learn about avenues you can turn to for help, such as to either negotiate directly using the creditors, or seek assistance from independent organizations. We outline 3 different choices you have below.

#1 Self-Administration

Borrowers who're facing difficulties in paying their debt due to mounting interest can approach their creditors to appeal for assistance by conntacting them directly.

They can choose either to appeal to get their repayment restructured into a comfortable amount they can afford, in order to negotiate directly with the creditors for a discount on the outstanding debt amount of creating a lump sum payment.

For the former, borrowers must explain their financial situation towards the creditor, after which propose a repayment amount according to the things they can afford. It is also important for the borrowers to incorporate relevant supporting documents such as income and CPF statements once they negotiate for a solution.

For the second however, the approach will be suitable when the borrower is able to raise a lump sum with the sale of assets, for example shares or properties, or going for a low-interest loan from a non-financial institution, such as a co-operative society. The borrower ought to be in a position to raise a substantive lump sum payment amount that's attractive for the credit to initiate a negotiation.

It is essential to note that self-administration can be useful for those who are able to articulate their own finances and comfy to barter directly with the creditors. Also, the sole discretion to accept or reject the proposal lies using the creditors.

#2 Debt consolidation reduction Plan (DCP)

Debt Consolidation Plan (DCP) is really a debt refinancing programme that provides the borrower a choice to consolidate all their unsecured debts, including credit card debt, unsecured loan and line of credit, across financial institutions with one participating institution.

To qualify for the DCP, the borrower must be a Singapore Citizen or a Permanent Resident, earning between $20,000 and below $120,000 per year, with net personal belongings of less than $2 million. Additionally, the total interest-bearing personal debt on all unsecured facilities over the financial institutions in Singapore must exceed 12 times of the borrower's monthly income.

DCP excludes any renovation loan, education loan, medical loan, credit facility granted for businesses or business purposes and/or outstanding debts under joint accounts.

Borrowers can approach any participating financial institution of their option to make an application for the DCP. However, you should note that the banking institutions possess the full discretion to approve or reject the applying. Also, the conditions and terms of DCP, including interest rates and repayment period, can vary across different banks.

#3 Debt Management Programme (DMP)

For those who require more help in managing their debt, they can use the Debt Management Programme administered through the Credit Counselling Singapore (CCS), a non-profit credit counselling social service agency.

DMP is made for borrowers who're experiencing financial distress with their unsecured debt and loan, are facing difficulties in managing their basic bills and could be near facing law suit in the creditors.

To be eligible for the DMP, the borrower must have unsecured debts owing to one or more banks, with the total amount with a minimum of $10,000. The account must be at least one years old.

Borrowers who wish to embark on the DMP should first attend an information talk on managing debt that's held weekly, or to take the online Managing debt Course and pass the Debt Advice Knowledge Quiz. The objective of attending the talk or course would be to allow the borrower to possess a clearer understanding of their options.

Once the borrower will quickly seek assistance from CCS, they will be required to submit a request counselling appointment by completing a prescribed Counselling Request Package, and to attach the package with supporting documents.

Borrowers must be first assessed for his or her suitability before being enrolled in to the programme. Upon enrollment, the borrower will be designated to a counsellor, who'll help to negotiate using the bank creditors to work on a lower interest rate and longer repayment period, which is subjected to the approval of the bank creditors.

The counsellor will even work with the borrower on managing expenses and budgeting so as to put aside monthly payments for repayment. It is important to note that the borrower won't be able to apply for any unsecured credit facilities with any bank.

Tackling Your Debt Situation Sooner Instead of Later

As you can observe, there are channels readily available for borrowers to restructure and tackle their debt problems. That's the reason it is a wise proceed to seek help rather than ignore and avoid the issue, which can fester into something bigger, as well as culminating in bankruptcy.