Paul Ho (iCompareLoan.com)
The prolonged sluggish Singapore economy made worse by the high land cost policy ensues that Singapore’s cost of doing business remains prohibitively high. Cost of living is also unbearably high.
The association of Banks of Singapore (ABS) announced the Debt Consolidation Plan (DCP) to be effective on the 23rd Jan 2017.
The Debt Consolidation Plan program aims to help borrowers reduce their debts over time. It is to prepare borrowers who will be affected by the industry-wide borrowing limit cut, which is being reduced from the current 24 times to 18 times in June 2017 and 12 times of their monthly salary in June 2019.
This should ideally prevent the borrowers from being eaten alive by the debt and to prevent the debt from snowballing.
Picture 1: Debt Consolidation Plan, Openclipart.org, iCompareLoan.com
Who will Debt Consolidation Plan really help?
This is applicable only to those who owe more than 12 times their salary with salary ranging from $20,000 to $120,000 and have net personal assets less than $2m.
So it will only help people who still have a job and are highly leveraged.
You must also be a Singaporean or a Permanent resident to qualify.
What if these people who are on debt consolidation suddenly lose their job, what will happen next? There is no answer yet.
What if you are retrenched?
If you are retrenched, you will not be helped under Debt Consolidation plan.
So it is still akin to bringing you an umbrella on a SUNNY day, to help you maintain your already beautiful skin. For people who are experiencing the proverbial rainy day, sorry no umbrella.
We hope there will be some safety net for people who are retrenched.
How does Debt Consolidation work?
Debt consolidation plan allows you to close all credit card, personal loans and facilities and bring them over to one single bank for ease of management.
You will also have a revolving credit that is 1 time of your salary so that you can still pay bills, etc.
Will it really help if you have 10 accounts and 1 single consolidated account?
For most people, having a single account may help.
14 Banks Participate in Debt Consolidation Plan
They are: –
American Express International, Inc.
Australia and New Zealand Banking Group Limited
Bank of China Limited Singapore
CIMB Bank Berhad
Citibank Singapore Limited
DBS Bank Ltd
Diners Club Singapore Pte Ltd
HSBC Bank (Singapore) Limited
Industrial and Commercial Bank of China Limited
Standard Chartered Bank (Singapore) Limited
Malayan Banking Berhad
Oversea-Chinese Banking Corporation Limited
RHB Bank Berhad
United Overseas Bank Limited
New financial institutions may be added or removed from time to time.
Each applicant can only have 1 debt consolidation plan. There will be a DC register that helps banks determine that you only have 1 debt consolidation plan at any one time with only 1 financial institution.
How can I apply to Debt Consolidation Plan?
If you are keen to apply, please provide the following: –
- Copy of NRIC (Front and back)
- Latest Credit Bureau Report
- Latest income documents
- Latest Credit card and unsecured credit loan statements (hard copy or soft copy)
- Confirmation letter evidencing unbilled balances for unsecured credit installment plans (if any)
The debt consolidation plan (DCP) tenure stretches from 1 year to 10 years, depending on the bank, this helps you to manage your cash flow better.
One single account also helps you to avoid tons of penalties and late fees.
Hopefully this allows you to repay your personal loan and reduce the indebtedness faster.
The government does not cover for any default risks, hence the banks will still be very selective in who they lend to and also charge an interest rate that commensurate with the risks.
iCompareLoan wish list for Debt Consolidation Plan
We wish for the debt consolidation plan to include retrenched people.
We would like the government to underwrite their debt liability of jobless people to temporarily freeze their debt repayment till they find a job.
Find out from us about Debt Consolidation plan.