Debt management involves either working directly or indirectly with creditors to restructure debt to allow the borrower to manage repayments more comfortably. A borrower may negotiate directly with creditors or seek assistance from an independent third party such as a credit counselling organisation.
There are several ways you can address problem debts.
1. Self Administration. Negotiate and propose for a manageable repayment plan directly with creditors.
2. Lump Sum Settlement with Discount. Negotiate directly with creditors for a discounted settlement of the debt with a lump sum payment.
3. Debt Consolidation Plan (DCP). Apply directly to banks and financial institutions. A DCP is a debt refinancing programme that allows the borrower to “combine” unsecured borrowings with different financial institutions into a single loan with one financial institution.
4. Debt Management Programme (DMP). Approach Credit Counselling Singapore (CCS) for assistance to facilitate an arrangement that allows the borrower to gradually repay all unsecured borrowings through affordable monthly instalments to each creditor.
5. Bankruptcy. A legal proceeding that may be initiated by creditors or the borrower, when the borrower is unable to repay outstanding debts of at least $15,000. There are legal consequences of being declared bankrupt and should be seen the last resort.
6. Debt Repayment Scheme (DRS). A pre-bankruptcy scheme administered by the Official Assignee, if the debtor is eligible and assessed suitable during a bankruptcy proceeding. The debtor is not adjudged a bankrupt while under DRS.