How to Manage Mounting Debt and Maintain Your credit standing

Small amount of overdue debt can spiral into something huge and seemingly uncontrollable. Having overdue debts can be a frightening prospect as it can take on a high compound interest rate. But with patience, responsibility and deliberate action, you can trim your outstanding overdue balances gradually and better manage your debt.

Image 1: Manage Mounting Debt, Pixabay


To better manage your debts, you have to be active, consistent and punctual when making payments. Any failure to make full payments will incur a minimum fee and interest rate charges, therefore it is best to pay on time and in full. If you are having difficulty doing so, you should look to limit your expenditure and maximise the repayments you are able to make to credit lenders. When faced with repayment to multiple credit facilities, it would be wise to prioritise those with higher interest rates first.

When you have high debt levels, you may end up failing your TDSR and that causes you to stick with an expensive home loan.

If you want to reduce your debt but are unsure of where to start, do not worry! You can get a credit report from Credit Bureau Singapore to view a summary of your debt history and find all the necessary data that can help you make a comprehensive plan to reduce your outstanding balances. It can help you start building good habits of managing your personal finances.


Debt Management Programme

If you are still struggling to manage your debts despite your best efforts, you may consider signing up for the Debt Management Programme (DMP), an initiative by Credit Counselling Singapore (CCS). CCS specialises in assisting people with unsecured, legal, and consumer debt problems.

DMP is a voluntary monthly debt instalment plan that allows the consumers to repay their unsecured debt (e.g. credit cards and overdraft), including the principal amount and interest charges, to their creditors over a reasonable period of time. It is, however, still the creditors’ prerogative in offering an instalment plan and in specifying the terms of the repayment.


Debt Consolidation Plan

Introduced in January 2017, the Debt Consolidation Plan (DCP) is a little known option of reducing credit debt. DCP is a debt refinancing programme where customers consolidate their unsecured credit facilities across various financial institutions under 1 participating financial institution.
You may wish to consider DCP if you are juggling multiple outstanding repayments across various financial institutions. Under DCP, you will have 1) a greater ease of payment, 2) lower interest rates and 3) greater control of finances under a disciplined fixed monthly repayment scheme.
However, do note that some categories of unsecured loans are not included from DCP, such as joint accounts, renovation loans, education loans, medical loans, and/or credit facilities granted for businesses or business purposes.
To be eligible for DCP, you must meet the following requirements:
1) You are a Singapore Citizen or Singapore Permanent Resident
2) Earn between S$20,000 and below S$120,000 per annum with Net Personal Assets of less than $2 million
3) Have total interest bearing balances^ in respect of unsecured credit facilities with financial institutions in Singapore exceeding 12 times the monthly income
^ Interest bearing balances include amounts rolled over on credit card and balances outstanding on unsecured loans that accrue interest
You may approach any of the 14 participating Financial Institutions (FI) for a DCP. It will be up to any one of the FIs to make an offer. The first step to reducing debts or building credit scores is to know what areas can be improved. You can start by obtaining your credit report from Credit Bureau Singapore. A little investment can go a long way!

Do not default on your loan payments.
To find out more, please visit Credit Bureau Singapore website and like our Facebook page because we constantly post useful content which you don’t want to miss! Alternatively, you can call our friendly customer service at 6565 6363.

Written by Credit Bureau Singapore

Credit Bureau (Singapore) Pte Ltd (CBS) is Singapore's most comprehensive consumer credit bureau that has full-industry uploads from all retail banks and major financial institutions. It is a joint venture between The Association of Banks in Singapore (ABS) and Infocredit Holdings Pte Ltd.

8 Saint Thomas (FREEHOLD) Offers a Home at the Heart of Orchard Road

millennials first home

A Millennial’s First Home