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      Being in debt can stress you out. No matter who you are in the real world – jobless or a white collar worker – no matter your background, for as long as you are in debt and the amount only gets bigger, you will be at your wits end when you see no way out of it.

      After all, that is the nature of debts. Without proper planning and budgeting, everything you think you have can crumble before your very eyes. The moment you stop paying as per the agreement you made with your creditors, or think you found the loophole when you pay only the minimum sum every month, you’ll discover the true meaning of the word “interest”.

      Not all is lost. There are viable solutions you can explore in order to settle your debt issues. Some of these solutions may not apply to you or even work for you as there are different criterias to be met and subjected to the approval of the relevant authorities.

      Solution 1: Self Administration
      This solution means you engage with your creditors to come up with a repayment plan that is both beneficial to you and your creditors. Usually creditors will assist in giving you repayment plans that needs to be paid by a certain time frame.

      How does this work?
      The simplest way is to send an email to each of your creditors or arrange for a meeting with at their branches or offices to inform them of your intention, which is to request for a lowered repayment plan based on the amount that you are comfortable with. 

      Although this may sound easy, you have to ensure that you have all the necessary documents and evidence ready to provide as proof in explaining to them why you are in need of such assistance. As an example, take your salary and deduct your monthly expenditure (based on necessary expenses such as bills and other liabilities such as dialysis, therapies etc or if you are assisting in paying for your family members and NOT on unnecessary expenses such as shopping or eating out etc.) and see what excess you have to offer them. This is good for those who do not have many creditors to deal with.

      Solution 2: Full payment at a discounted rate
      This is one of the most “hush hush” solution that people or creditors don’t exactly talk about. Say you have a debt of $15,000 plus recurring interests for the past few years, but your principal loan was just $7,000. One day, you have the full amount of $7,000 and you want to clear off your debt. The question is, how do you do this?

      Contact your creditors and inform them. Prior to that call, calculate how much you have paid so far and in addition to the $7,000 that you’re planning to pay them with, total up this amount and inform them that that is the total amount they would be getting from you should they agree to let you make a full settlement immediately.

      The only downside to this solution is that it will more likely happen to those who have been in debt for years.

      Solution 3: External Help from Relevant Organization
      Did you know that there are some external organizations or private entities that you can seek help to represent you when it comes to your finances? These organizations will assist to negotiate to financial institutions or your creditors in an attempt to get you a lower repayment plan.

      For credit cards and personal loans, CCS (Credit Counselling Singapore) might be able to help those who are in debt to come up with a repayment plan that is more relevant to your financial situation. This repayment scheme is also known as the Debt Management Program.

      This is similar to the first solution – but instead of you handling the administration, someone else is assisting you with it. You may need to attend a forum/talk by CCS and schedule an appointment with their advisors who will go through your income and expenditure. From there, they will suggest a more realistic repayment plan for you.

      The only downside to this is that as of now, “luxury” loans such as a renovation loan or licensed money lenders is not included in the repayment plan. You may visit their website for more information.

      For cases involving licensed money lenders, you may seek assistance from organizations such as Adullam or Silver Lining.

      Solution 4: Self-Administered Bankruptcy: Debt Repayment Scheme
      Bankruptcy used to be a taboo term in Singapore. There is a negative connotation when it comes to this word as people from the earlier generations in Singapore were brought up with this being a punishment for not being able to handle your finances well. However, back in those days, there were not many loans from organizations or financial institutions available and credit cards were not even heard of. Growing up and as they grow older, their perception towards bankruptcy sticks and is the last thing that should ever be considered. This is often linked to face value, the need to not be embarrassed to society despite the weight on their shoulder.

      These days, with more and more cases happening, the Ministry of Law has introduced schemes to ease the financial difficulties of Singaporeans.

      The Debt Repayment Scheme is an example of an initiative by the Ministry of Law.

      To better understand this process, here are some scenarios:
      Jack has accumulated debts amounting to $70,000 from different financial institutions. He used to pay his creditors on time as he was drawing a high salary. However, things changed when Jack was retrenched. The salary he draws from his new job only allows him to barely pay for his monthly expenses. He was not able to get new loans and he was not able to seek the assistance from the relevant bodies. Now, he receives endless calls and letters from the various financial institutions hounding him for repayments.

      Option 1 (Creditors’ Petition)
      Jack, like many others who are in similar debt situation, thought that there is no way out of this as the amount seemed impossible. One financial institution made the order to sue him because he stopped paying for his loans. This process is called Creditors Petition. Jack will now be summoned to go through court proceedings for his bankruptcy suit. During the hearing, the judge will pass the proposal for him to undergo the Debt Repayment Scheme as his total amount was less than $100,000 and for him to settle his loans within the next 5 years. However, due to his current financial situation, Jack decides to go through with bankruptcy despite having to still make his monthly repayment although he understands the stigma and restrictions that comes with it.

      Option 2 (Self Petition)
      Jack found alternatives and decided to seek assistance. Knowing the possible impact that can happen should creditors issue the Creditors Petition, he decides to self-administer himself into bankruptcy.

      He prepares the documentation needed and proceeds to the Supreme Court to take an oath declaring all information provided are true as he administers himself into bankruptcy. However, instead of being a bankrupt, he was considered into the Debt Repayment Scheme (DRS)  to pay off his debts because he fulfilled the following criteria:

      1) He had full-time employment
      2) He was not a bankrupt or in DRS for the last 5 years
      3) He is not a partner or a shareholder of a company
      4) He has not been in a voluntary agreement arrangement in Court
      5) His debts does not exceed $100,000

      Jack decides to take up this arrangement as set out by the Official Assignee and proceeded to pay his dues without missing a single payment for a maximum of 5 years.

      In conclusion, there will always be solutions, but one should never miss or mess around with debt repayments as the effects of it is detrimental to your financial future. This includes future important loans like housing loans, vehicle loans or education loans.