What Is Debt Management In Singapore?

The concept of debt can be daunting, and many often find themselves in a seemingly never-ending cycle of incurring more debt to pay off existing loans. While the situation may seem hopeless, Debtox wants to let you know that there is indeed a way out and an end to the cycle of debt. 

When it comes to managing debt in Singapore, there are several options available. We hope to be able to break them down within this guide, and in turn, shed some light on how we can help you avoid bankruptcy. 

What Is A Debt Management Plan (DMP) In Singapore? 

A Debt Management Plan (DMP) is structured to aid debtors in repaying their unsecured debts through a fair repayment plan. This service is offered by Credit Counselling Singapore (CCS) through collaboration with your banks, credit card issuers, and licensed moneylenders. 

Essentially, a Debt Management Plan helps you with all your unsecured creditors. A Credit Counsellor will be assigned to your case and will aid you in developing a repayment schedule that you can afford based on your income at a reduced interest rate.  

However, it is important to note that with a DMP, your debt will not be consolidated, meaning that you will still be making payments to individual creditors. While the interest accrued is likely to be less than with a credit card, it will still be applied to your owings. 

Additionally, moneylenders typically have a max tenure of 2 years, during which time the interest can often add up to more than twice as much as the amount that you had originally taken out.  

To find out more about DMPs check out our guide on Debt Management Plans in Singapore (2023).  

What Is A Debt Consolidation Plan (DCP) In Singapore?

The primary differences between a Debt Management Plan and a Debt Consolidation Plan are that, while both help you with your unsecured debts, a DCP is handled by a bank that takes over your various outstanding loans. You will then focus on paying a single loan off. 

Additionally, unlike a DMP, a DCP does not include any loans taken out from licensed moneylenders. Its sole focus is on credit card loans and bank loans. 

The benefit is that debtors only need to focus on dealing with a single financial institution and the accompanying interest rate, which can greatly alleviate the mental stress related to debt. 

It is important to highlight that DCPs do not cover any loans taken from moneylenders or other unsecured debt, meaning that interest is still incurred. 

For more information on Debt Consolidation Plans check out our DCP in Singapore Guide (2023). 

What Is A Debt Repayment Scheme (DRS) In Singapore? 

A DRS in Singapore is a government scheme introduced in 2009 that aids debtors in avoiding bankruptcy and the ramifications that are associated with bankruptcy. A DRS gives debtors the opportunity to consolidate all existing loans from creditors. Their debt will be paid off over a maximum period of 5 years in monthly instalments. 

One of the main benefits of a Debt Repayment Scheme is that once you have initiated the process, creditors will not be able to take legal action against you. 

A DRS helps debtors clear their debt for all unsecured debt without the burden of growing interest rates and a total sum that never seems to decrease despite monthly payments being made.

Related Article: Your Complete Guide To A Debt Repayment Scheme In Singapore (2023)

Who Is Eligible For A Debt Repayment Scheme (DRS) In Singapore? 

You should now have a slightly better understanding of the different debt management options available to you if you have found yourself in a circumstance where you require help. If a Debt Repayment Scheme sounds the most suited to your situation, then you may be wondering if you are eligible. 

Eligibility for a Debt Repayment Scheme in Singapore: 

• Incurred debt between S$15000 to S$150000

• The debtor must have a full-time job or stable source of income 

• Never have been declared bankrupt

• Not have been in a DRS in the last 5 years 

• Not a sole proprietor or partner of a company 

How Can Debtox Help Me With A Debt Repayment Scheme? 

As mentioned, a DRS is a government-initiated scheme designed to help individuals avoid bankruptcy. While you may be able to take the necessary steps towards putting yourself in a Debt Repayment Scheme, such as making a bankruptcy application against yourself, there are various milestones and costs along the way that can often become confusing or overwhelming. 

Additionally, in order to successfully enter a Debt Repayment Scheme in Singapore, you will need to engage the services of a Private Trustee in Bankruptcy (PTIB). This is due to a new law that was introduced in November 2023. 

Our team of Debt Consultants at Debtox are trained to guide you through the entire process and lead you towards financial independence. We also work with various institutions to ensure that you have all the necessary documents and support, such as the assistance of a PTIB. 

Related Article: What Are The Different Kinds Of Debt And How Can I Achieve Freedom From Debt In Singapore?

What Are My Next Steps Towards Achieving Freedom From Debt? 

If you would like to know more about how a Debt Repayment Scheme works and how it could benefit you, we recommend that you schedule an appointment with one of our Debt Consultants. We will be happy to further explain the processes, costs, and options available to you - rest assured that we will be with you for each step of the journey. 

The initial consultation is free and designed to help you develop a clearer understanding of what is required from you, the required timeframe, monthly payments, and costs. 

Should you wish to get in touch with us, you can WhatsApp us at +65 9729 6311 or drop us an email at hello@debtox.sg