Debt Repayment in Singapore: What Are My Options?

Last updated on December 5, 2023

"pay debt" written on calender

If you have accumulated some debt and need assistance to manage them, the good news is that you do not have to bear that burden all by yourself. There are various types of debt repayment schemes and programmes available in Singapore.

This article will discuss the following topics:

What are Debt Repayment Programmes?

Debt repayment programmes refer to structured programmes or plans designed to help individuals in debt (debtors) manage their debts. Managing your debt through a debt repayment programme is generally preferred over declaring bankruptcy, because bankrupts in Singapore are subject to various restrictions on what they can do and how they can go about their daily lives, including:

  • Having to obtain approval before travelling overseas.
  • Having to obtain permission to manage a business or corporation.
  • Having to disclose your bankruptcy status in order to obtain further credit (or a loan) exceeding $1,000.

As a result, bankruptcy is typically viewed as a measure of last resort when all other options have been exhausted.

What are the Various Debt Repayment Options Currently Available in Singapore?

The most common debt repayment programmes available in Singapore are:

  • Debt Consolidation Plan
  • Debt Management Programme and Moneylender Debt Management Programme
  • Debt Repayment Scheme

Debt Consolidation Plan

What is a Debt Consolidation Plan and how does it work?

The Debt Consolidation Plan (DCP) is a debt refinancing (i.e. replacing an existing debt with another debt with terms and/or conditions that are typically more favourable) programme that allows individuals to consolidate unsecured credit facilities across multiple financial institutions in Singapore with one financial institution. For example, if you have loans from, and credit card debts owing to, 3 separate banks, you can leverage the DCP to consolidate all your loans and debts with just 1 bank instead.

Unsecured credit facilities refer to credit facilities where you are not required to pledge collateral to apply for the loan as opposed to secured credit facilities. Common forms of secured credit facilities are mortgage loans or vehicle loans, where you are required to pledge your house or vehicle as collateral to “secure” the loan. Common forms of unsecured credit facilities are personal loans, most credit cards, and renovation loans.

In terms of the mechanics of a DCP, the general steps are as follows:

  1. Apply for a DCP with a participating financial institution.
  2. After the financial institution approves your DCP application, the financial institution will disburse the DCP amount (equivalent to the total outstanding balance of all your loans plus an additional 5% for any incidental charges if it’s your first DCP loan).
  3. The financial institutions that you previously had loans/debts with will receive the amounts that they are owed directly.
  4. If there are any outstanding balances still payable, you must settle the shortfall directly with the financial institutions.
  5. After all outstanding amounts are paid, your previous accounts with the financial institutions will be closed automatically.
  6. Instead of making repayments to all the financial institutions that you had loans/debts with, upon approval of your DCP loan, you only repay your monthly DCP repayment amount to your DCP financial institution.

For a more detailed discussion on the DCP, you can access our other article on the plan here.

What is the amount of debt that the Debt Consolidation Plan Is most suited for?

The DCP is most suited for debtors with loans totalling more than 12 times their monthly income, e.g. if you have total loans of more than $60,000 when your monthly income is $5,000. In fact, this is one of the conditions that must be met for a debtor to be eligible for the DCP.

What type of debt is the Debt Consolidation Plan most suited for? Are there any eligibility requirements? 

The DCP is suitable if you have multiple unsecured credit facilities. However, the following types of unsecured loans are excluded:

  • Loans granted under joint accounts
  • Renovation loans
  • Education loans
  • Medical loans
  • Business-related credit facilities

In order to be eligible for the DCP, you must meet all of the following eligibility requirements:

  • You must be a Singapore Citizen or Singapore Permanent Resident.
  • You must earn between $20,000 and $120,000 (non-inclusive) per annum, with Net Personal Assets (i.e. total value of your assets less your liabilities) of less than $2 million.
  • You must have total interest-bearing unsecured debt on all credit cards and unsecured credit facilities with financial institutions in Singapore that exceeds 12 times your monthly income.

Who would the debtor need to approach to apply for the Debt Consolidation Plan?

In order to apply for a DCP, you can approach any of the 16 participating financial institutions listed here, which include DBS Bank, Citibank Singapore, Bank of China, HSBC Bank (Singapore) etc.

Are there any service charges/costs involved when applying for a Debt Consolidation Plan?

Yes, there are service charges involved, but these differ based on the financial institution from which you are obtaining the DCP. You will have to look at the terms and conditions on each financial institution’s webpage for more information. For example, DBS Bank charges a processing fee of $99, while HSBC Bank charges a processing fee of 1% of the approved DCP amount, subject to a minimum of $88.

What happens if the debtor is not qualified for the Debt Consolidation Plan? 

If you are ineligible for the DCP, you can consider applying for the Debt Management Programme or Moneylender Debt Management Programme, whichever is applicable. Further, if a bankruptcy application has been made against you, you may also be eligible for the DRS.

Debt Management Programme and Moneylender Debt Management Programme

What is the Debt Management Programme and Moneylender Debt Management Programme? What types of debt are they most suited for?

The Debt Management Programme (DMP) and Moneylender Debt Management Programme (MDMP) are voluntary repayment agreements between the debtor and the creditor, both of which are facilitated by Credit Counselling Singapore (CCS). CCS is a local non-profit organisation which aims to help individuals address their unsecured debt problems through education, credit counselling and facilitated debt restructuring. CCS facilitates the DMP and MDMP by being the point of contact for applications for the programmes, as well as the intermediary between debtors and the banks/moneylenders.

However, whether the DMP or MDMP is the more appropriate programme for you depends on whom your debts are owing to. The DMP covers only unsecured, legal, consumer debts (e.g. credit card debts, renovation loans etc.) owing to banks and credit card issuers in Singapore, which are represented by The Association of Banks in Singapore (ABS). The list of ABS’ member banks can be accessed at ABS’ website, and includes DBS Bank, OCBC Bank, UOB, HSBC Bank (Singapore) etc.

On the other hand, the MDMP covers unsecured, legal, consumer debts owing to licensed moneylenders, whether or not they are members of Credit Association of Singapore (CAS). The list of licensed moneylenders that are members of CAS can be accessed at CAS’ website.

How do the Debt Management Programme and Moneylender Debt Management Programme work? 

If you are keen to work out a DMP or MDMP, you should take the following steps:

  1. Attend CCS’ Consumer Debt Management Talk or Consumer Debt Management Webinar, which are conducted on a weekly basis, and are open to the public. The schedule of upcoming information talks, and how to sign up for them, can be accessed on CCS’ website.
  2. After attending the information talk, if you are still keen on working out a DMP/MDMP, you should complete and submit a counselling request form, along with relevant supporting documents such as his/her income statement, CPF statement, CBS report etc. to CCS.
  3. CCS will then contact you directly to set up a one-to-one credit counselling appointment with a credit counsellor. The credit counsellor will assess whether you have sufficient payment capacity (i.e. whether you are able to repay all your unsecured debts fully within a reasonable time – ideally within an average of 7 years).
  4. If you are assessed to have sufficient payment capacity, CCS will prepare a DMP/MDMP Proposal and Repayment Schedule for your review, before it is sent out to your creditors for their review and approval. Under the DMP/MDMP Proposal and Repayment Schedule, each creditor will be fully repaid in affordable monthly instalments, at reduced interest rates, and over a reasonable period. Your payment capacity under the DMP/MDMP Proposal and Repayment Schedule will take into account the expenses for yourself and your family and will be prepared on a case-by-case basis.
  5. After your creditors approve the DMP/MDMP Proposal, you will attend an onboarding session with CCS, where you will be briefed on what to expect, how to set up payments, and how to manage your money. You will then commence payments to the creditors per the Repayment Schedule.
  6. While on the DMP/MDMP, all your existing credit cards and unsecured facilities will be cancelled.

What is the amount of debt that the Debt Management Programme and Moneylender Debt Management Programme are most suited for?

The DMP and MDMP are suitable for debtors with unsecured debts of more than $10,000.

Are there any eligibility requirements to apply for the Debt Management Programme and Moneylender Debt Management Programme? 

The general eligibility criteria to be placed on a DMP are as follows:

  • You must have unsecured debts of more than $10,000.
  • Your unsecured debts must be owing to two or more creditors.
  • You must have been assessed by the CCS credit counsellor to have sufficient payment capacity to repay all your unsecured debts fully within a reasonable time.

The general eligibility criteria to be placed on an MDMP are as follows:

  • If you have unsecured debts with both bank creditors and moneylenders, you must have been assessed by the CCS credit counsellor to have sufficient payment capacity to work out a DMP for your unsecured debts with bank creditors, and also sufficient payment capacity to repay your unsecured debts to the licensed moneylender creditors within 2 years.
  • However, if you only have unsecured debts with moneylenders, you must be assessed to have sufficient payment capacity to repay your unsecured debts to the licensed moneylender creditors within 2 years.

Who would the debtor need to approach to apply for the Debt Management Programme and Moneylender Debt Management Programme

CCS implements the DMP and MDMP, so you will have to approach CCS to work out a DMP and/or MDMP.

Are there any service charges/costs involved when applying for a Debt Management Programme and Moneylender Debt Management Programme?

There are no charges for attending the initial CCS information talk on debt management, or for attending the credit counselling sessions by CCS. However, should you decide to go for the DMP or MDMP, you have to pay a one-off fee in the range of $50 and $250, depending on the size of your debt.

What happens if the debtor is unable to successfully make payment under Debt Management Programme and Moneylender Debt Management Programme

If you are assessed to be unsuitable for the DMP/MDMP, you may still apply for the DCP, or if a bankruptcy application has been made against you, you may also be eligible for the DRS.

If you are assessed to be suitable for the DMP/MDMP, but are unable to keep up with the payments under the Repayment Schedule, pursuant to the terms and conditions set by each of your creditors, they may be able to charge you an increased interest rate for the remaining outstanding sums due, or even demand that you repay the entire amount of the outstanding sums due immediately.

Debt Repayment Scheme

What is the Debt Repayment Scheme about and how does it work?

The Debt Repayment Scheme (DRS) is a pre-bankruptcy repayment scheme administered by the Official Assignee, who is a public servant and officer of the Court in charge of administering bankrupts’ affairs in bankruptcy.

Unlike the other options discussed above, the DRS is not something that you can sign up for or apply for. Instead, it is initiated only when you or your creditor makes a bankruptcy application against you in court. If your total debt amount does not exceed $150,000, the court may refer your case to the Official Assignee, who will assess your eligibility and suitability for the DRS. In other words, the DRS is an alternative to being declared bankrupt.

In terms of the process leading up to being put on a DRS, the main steps are as follows:

  1. At the hearing of the bankruptcy application, the court may decide to postpone the hearing of the application for up to 6 months for the OA to assess whether you are suitable for the DRS.
  2. Thereafter, you will receive a notice from the Insolvency Office asking you to view an introductory video on the DRS (and submit your supporting documents) within 14 days.
  3. If you fulfil the eligibility criteria (set out below) explained in the introductory video, and are keen to proceed with the DRS assessment, you must follow the instructions to submit documents relating to your financial affairs, income and expenditure, as well as your proposed debt repayment plan to your creditors.
  4. If the Official Assignee finds you to be suitable for the DRS, a DRS administrator will prepare a Debt Repayment Plan (DRP) for you. On the other hand, if you are deemed unsuitable for the DRS, your case will be referred back to the Court for the bankruptcy proceedings to be heard again, where you may be liable to be declared bankrupt.
  5. After the DRP is prepared, you will be required to attend a meeting with creditors which will be chaired and facilitated by the DRS administrators. The DRS administrators will discuss your approved monthly instalment, and terms and conditions of your DRP with your creditors.

For a more detailed discussion of the DRS, you can access our other article on the scheme here.

What is the amount of debt that the Debt Repayment Scheme is most suited for?

The DRS is only available if your total debt amount does not exceed $150,000.

What type of debt is the option most suited for? Are there any eligibility requirements? 

The eligibility requirements for the DRS are as follows:

  • Your total debt amount must not exceed $150,000.
  • You must be gainfully employed and earn a regular income.
  • You must not have been declared bankrupt or been on the DRS in the last 5 years.
  • You must not have been subject to a court-based arrangement (i.e. a debt repayment arrangement which has to be supervised by the court, such as the Individual Voluntary Arrangement, which is a legally binding agreement between you and your creditors where you agree to pay all or part of your debts over a period, and which needs to be approved by the court and administered by an insolvency practitioner) in the last 5 years.
  • You must not be a sole proprietor or partner in any firm.

Who would the debtor need to approach to apply for a Debt Repayment Scheme?

As mentioned above, there is no way for you to apply or sign up for the DRS. The process is only initiated upon a bankruptcy application being made against you.

Are there any service charges/costs involved under a Debt Repayment Scheme?

There are various charges payable for the DRS, at various stages of the process. A summary of the charges payable at their corresponding stages is set out in the table below:

What are the fees for? Amount When is it due?
Preliminary administration $350 At the submission of documents
OA’s review of your suitability for the DRS $250 On or before the meeting of creditors
Annual administration of the DRS after the DRP commences $300/year for the first 2 years; and $350/year for the next 3 years At the start of every year of administration
Collection fee by the OA of all payments made by you 1.5% of amount collected
Distribution fee by the OA of dividends to creditors 3% of amount distributed

What happens if the debtor is unable to successfully make payment under this option? What are the next available steps/options?

If you are assessed to be ineligible or unsuitable to make payment under this option, your case will be referred back to the court for the bankruptcy proceedings to be heard again, where you may be liable to be declared bankrupt.

For a more detailed discussion on bankruptcy in Singapore, you can refer to our other article on the Process of Filing for Bankruptcy in Singapore & What’s Next?.

Comparison of the Various Debt Repayment Options Available in Singapore

The benefits of each of the three types of debt repayment options discussed above, as well as how they compare in relation to the others on the basis of two characteristics, privacy and the type and amount of debt that is covered, are set out below:

1. Debt Consolidation Plan

    • Benefits/Comparison:
      • Privacy: One of the benefits of the DCP is the privacy it affords to the debtors. As the repayment arrangement is made between the debtor, the participating financial institution and the other creditors, there is no public record of the debtor’s indebtedness. However, do note that if you take up a DCP, your record with Credit Bureau Singapore (CBS) will be updated with the “Debt Consolidation” product code, and this will stay on your CBS report for 3 years even after you finish making all your payments under the DCP. However, the good news is that your CBS report is only accessible by you and the CBS members, i.e. the banks.
      • Types/amount of debt: The DCP is more limited in terms of the types of loans that qualify for the plan – for e.g., renovation loans, education loans and medical loans are expressly excluded. There is also no upper limit to the amount of debt that you can have to be eligible for the DCP, but there is a minimum amount of debt that you need to have, i.e. debt of at least 12 times your monthly income.

2. Debt Management Programme and Moneylender Debt Management Programme

    • Benefits/Comparison:
      • Privacy: As with the DCP, the DMP and MDMP are also a repayment arrangement that is made between the debtor and the creditors, albeit facilitated by CCS. Thus, there is also no public record of the debtor’s indebtedness. However, while you are on the DMP/MDMP, the same will be reflected in your CBS report. Your DMP/MDMP status will be removed from the CBS records immediately after your DMP/MDMP has been completed, i.e. all your debts to your creditors have been paid off.
      • Types/amount of debt: The DMP/MDMP covers more types of loans as compared to the DCP, including renovation loans. There is also no upper limit to the amount of debt that you can have, and the lower limit is a far lower sum of $10,000. In other words, it should be easier in most cases to qualify for the DMP/MDMP, as compared to the DCP.

3. Debt Repayment Scheme

    • Benefits/Comparison:
      • Privacy: Unlike the programmes above, information about debtors on the DRS, being a scheme that is administered by an officer of the Court, is publicly accessible.
      • Types/amount of debt: The DRS does not differentiate between different types of loans, or the different types of creditors, so in that sense, is the most widely encompassing. However, there is an upper limit of $150,000 in terms of the total amount of debt that you can have. In other words, once your total debt exceeds $150,000, you will be ineligible for the DRS.

The table below provides a summary of the discussion in the article above at a quick glance:

 Programme  What is it?  Types of Debt Eligibility Criteria  Service Charges / Costs 
Debt Consolidation Plan (DCP)

 

  • Debt refinancing programme that allows you to consolidate unsecured credit facilities across multiple financial institutions with one financial institution
  • All unsecured credit facilities, except loans granted under joint accounts, renovation loans, education loans, medical loans and business-related credit facilities
  • Singapore Citizen or Singapore PR
  • Annual income of between $20,000 and $120,000 (non-inclusive), with Net Personal Assets of less than $2 million
  • Minimum total debt amount of 12 times your monthly income
  • Service charges differ based on the financial institution
Debt Management Programme (DMP) and Moneylender Debt Management Programme (MDMP)

 

  • Voluntary repayment agreements between you and your creditor, facilitated by CCS
DMP:

  • Unsecured, legal, consumer debts (e.g. credit card debts, renovation loans etc.) owing to banks and credit card issuers which are members of ABS

MDMP:

  • Unsecured, legal, consumer debts owing to licensed moneylenders, whether or not they are members of CAS
 DMP:

  • Minimum total debt about of more than $10,000
  • Unsecured debts owing to two or more creditors
  • Assessed by CCS to have sufficient payment capacity to repay all your unsecured debts fully within a reasonable time

MDMP:

  • Assessed by CCS to have sufficient payment capacity to work out a DMP for your unsecured debts with bank creditors
  • Assessed by CCS to have sufficient payment capacity to repay your unsecured debts to the licensed moneylender creditors within 2 years
  • No charges for attending the initial CCS information talk on debt management, or for attending the credit counselling sessions by CCS.
  • One-off fee of $50 to $250
Debt Repayment Scheme (DRS)
  • Pre-bankruptcy repayment scheme administered by the OA
  • All types of debts
  • Maximum total debt amount of $150,000
  • Gainfully employed and earning a regular income.
  • Not been a bankrupt or on the DRS in the last 5 years
  • Not been subject to a court-based arrangement in the last 5 years
  • Not be a sole proprietor or partner in any firm
  • Various charges payable at various stages of the process. A full breakdown is set out above

What Can You Do If None of the Above Debt Repayment Options Work for You?

If you do not qualify for any of the above debt repayment options, or if you have tried one or more of the above but are unable to follow through with the scheduled repayments as required, you can opt to voluntarily file for bankruptcy if your debts exceed $15,000. If you are declared bankrupt, your assets will be sold and the proceeds will go into a bankruptcy estate which is managed by a private trustee in bankruptcy (PTIB). The PTIB will administer and distribute your assets among your creditors.

For more information on how to file for bankruptcy, as well as the responsibility of and restrictions placed on a bankrupt, you can refer to our other article on the process of filing for bankruptcy in Singapore.

While filing for bankruptcy may be an attractive option, as your debt stops accumulating, creditors cannot sue you for your debts and your monthly repayments would be lower than if you had to pay off your creditors on your own, filing for bankruptcy is often seen as an option of last resort due to the restrictions that are placed on you as a bankrupt.

Hence, you may wish to consider the following options:

  • Approach the bank directly to ask for instalment payments; some banks have an in-house debt relief plan.
  • Sell your assets to raise funds (e.g., you can consider selling your house and moving to a smaller property, provided there are substantial surplus sale proceeds that can be used to repay your debts)
  • Borrow from friends/family to raise funds. The advantage of this option is that friends/family members typically do not charge interest and are more likely to work out a feasible monthly repayment plan with you.

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There are various types of debt repayment schemes and programmes available in Singapore, which are facilitated and managed by organisations like CCS, the financial institutions themselves, and even public officials like the Official Assignee. Each programme has its own set of eligibility requirements, application procedures (if applicable), and benefits.

If you have any questions about the various repayment methods, you should consider seeking further guidance or advice from a bankruptcy lawyer. The lawyer will be able to advise you on which programme is most suitable given your situation, and even help you in applying for or preparing your supporting documents for your application for the various programmes.

In the case of the DMP and MDMP, you can also contact CCS directly for more information on how to get started on the process.