Borrowing money can have many consequences. One of them is when you have the risk of not being able to pay back what you have to and that would cause distress.

Repaying debts and the challenges

The idea of borrowing money is to help you finance certain payments that you need to. This is where you want to avoid having any of your assets seized or confiscated when you fail to pay back your loan. When you borrow from banks, the action is quite simple and straightforward. If you cannot pay, they will get debt collectors to call you and if that fails, they will take the appropriate legal action.

Harassment from Loan Sharks

It gets a lot more complicated if you are unable to pay back the loan from loan sharks or illegal moneylenders. However, there are certain schemes that you could take to help you in this predicament. In Singapore, such programmes are:

  1. DCP or Debt Consolidation Plan
  2. DMP or Debt Management Programme
  3. DRS or Debt Repayment Scheme

Debt Consolidation Plan

The Debt Consolidation Plan, known in short as DCP is among the most legitimate way to have your debt problem solved. This programme is offered by 14 financial institutions in Singapore to help their customers avoid bankruptcy. This is one scheme which is designed to help customers manage their debts better. To enter into the DCP, the applicant must be committed to having the intention to pay off the debt. The total amount of unsecured debts must be more than 12 times the monthly salary to apply. Other factors about the DCP include:

  • Applicable for debts incurred in unsecured loans
  • This does not involve education and renovation loans
  • The interest rate is lower than the current market rates
  • The applicant can get this loan for up to 10 years

Debt Management Programme

This scheme known as DMP is to help you pay off your debts. This will involve mostly unsecured loans which include overdraft and credit cards. What happens is that the DMP which is managed by the CCS or Credit Counselling Singapore has helped many people to clear their debts. Applicants will be able to get valuable advice from consultants on how much they can pay and ensure they have enough to cover monthly expenses. After that, the monthly debt payment can be derived. The DMP applies to:

  • All types of unsecured loans which include the likes of car loans, education loans and even joint accounts
  • Your debt amount can be SGD 10,000 and above
  • Depending on your ability to pay, it can range from 5 to 10 years and the interest rate is usually lower

Debt Repayment Scheme

The Debt Repayment Scheme or DRS is one option you can take if you do not want to go into bankruptcy. This is one scheme which is possible if you cannot apply for either the DMP or the DCP. In other words, you are in a very stressful position in which you face the possibility of being declared bankrupt. In fact, this could be a situation which you have to be in when the court refers your case to the Insolvency Office. Your debts would not be more than SGD 100,000 and then the Insolvency Office will evaluate your capability. The DRS involves:

  • All types of loans as and when they are registered with the Insolvency Office
  • Total debts between SGD 15,000 and SGD 100,000
  • The term is usually up to 5 years

Each case treated with confidentiality

Your credit record is generally untouched when you are in these programmes. The DMP and DCP are programmes in which they do not register anything in the public domain. However, your record is filed with the Credit Bureau Singapore which remains confidential. In more dire cases in which your case is filed with the DRS, it becomes public which means that you will not be able to get any loan until you have fully paid off all your debts as this record can be referred to by just about anyone.