Tips on managing debt in Singapore

[SINGAPORE] With figures this high, it's clear that understanding how to manage and reduce your debt is more important than ever. Achieving financial freedom is possible—if you tackle your debts the right way and in good time.

Here’s a quick overview of some of the debt settlement options available right here in the Lion City:

1. Self-Administration

One of the most straightforward methods to handle your debt is to engage directly with your creditors. You can attempt to negotiate or appeal for a more manageable instalment plan.

That said, not all creditors are receptive to negotiations. Your success often hinges on your financial track record and the relationship you've built with the creditor. A solid credit history and a genuine willingness to repay, even slowly, can go a long way.

Be sure to approach them with proper preparation. Lay out your financial situation clearly in a written appeal, suggest a repayment amount you can realistically manage, and back your claims with supporting documents such as income slips or CPF statements.

2. Discounted Lump Sum Settlement

If you’re able to accumulate enough funds, you can propose a lump sum repayment to your creditors—ideally at a discounted rate.

While this can be a faster way to clear your debt, it’s not always feasible. You’ll need to plan carefully and ensure your financial commitments aren’t compromised. Selling off assets or securing a low-interest personal loan from a credible institution can help you raise the necessary funds.

Once you’re ready, negotiate confidently for a discount and aim for a clean, one-off settlement.

3. Debt Consolidation Plan (DCP)

The DCP allows you to combine all your unsecured debts into one manageable loan under a single financial institution.

This option is ideal for those juggling multiple repayments and seeking a simplified solution. Besides streamlining your finances, you may benefit from lower interest rates. However, it’s essential to read the fine print—check for fees and understand all terms before signing up.

Keep in mind that not all unsecured debts qualify (e.g., medical loans or joint accounts), and eligibility criteria apply. If you meet the requirements, you can apply directly through a participating bank. Upon approval, your existing unsecured credit lines will be closed, and a revolving credit facility will be opened to support your repayment.

4. Debt Management Programme (DMP)

If you're facing severe financial stress and unable to make repayments, there’s still hope.

The Credit Counselling Singapore (CCS) offers a DMP that includes financial counselling sessions to assess your ability to repay. The goal? To help you resolve your debts within 10 years.

This structured program offers reduced interest rates and extended repayment timelines—but it does require commitment. Failing to stick to the plan could mean penalties or a damaged credit score. If eligible, CCS will work with you to develop a sustainable repayment strategy.

5. Bankruptcy

When all other options are exhausted, individuals or businesses may apply for bankruptcy through the High Court.

Bankruptcy should always be considered a last resort, given its serious and lasting consequences. It can significantly affect your credit standing, making it difficult to access financial services or even secure housing.

If you do go down this path, you’ll be assigned a Private Trustee-in-Bankruptcy (PTIB) or an Official Assignee (OA) who will assess your finances and determine a reasonable repayment contribution to your creditors.

6. Debt Repayment Scheme (DRS)

If you want to avoid bankruptcy, the DRS might offer a lifeline. Administered by the OA, this structured plan allows eligible individuals to repay their debts over a fixed term—typically five years.

You can't apply for the DRS directly. It’s only considered once you file for bankruptcy and your OA deems you suitable. If approved, you'll avoid bankruptcy status and work toward clearing your debts in a systematic, court-supervised manner.

To learn more, visit the Ministry of Law’s Insolvency Office website.

Final Thoughts

Debt can feel overwhelming, especially without the right information. If you're unsure where to begin, don't hesitate to seek help from a professional.

Those needing personalised advice can book a one-on-one financial counselling session with CCS. A nominal one-time fee of S$30 applies, but all subsequent sessions are free if needed.

No debt situation is beyond resolution. Take the first step—help is within reach.