Hi All, I have debt of 49k, my annual income is 55k, i am a PR, half of my debt is credit card, the rest are personal loans. PLoans debt are fine and is reducing, my cc loan is worrying me.?

Hi Francis,

Sorry to hear about your situation.

Hmmm... you might be able to qualify for a Debt Management Program (DMP) under Credit Counselling Singapore (CCS).

The general criteria to be on a DMP are:

1. The individual has unsecured debts of $10,000 or more;

2. The individual has unsecured debts owing to multiple creditors;

3. The individual has been assessed to have sufficient payment capacity to make regular payments to creditors.

Basically, the DMP is a formal debt restructuring agreement facilitated by CCS with major consumer banks in Singapore.

It arranges the payment of unsecured debt into a more structured repayment plan.

Effectively, you'll be granted an extended repayment period and charged a moderated interest rate on your unsecured loans and outstanding credit card accounts.

You will then make monthly payments to each creditor individually over the entire duration of the programme. But most importantly, this is only available for individuals who have shown that they are willing and have the financial capacity to repay the debts owed.

Since you're still drawing an annual income, you just need to manage your finances and lower your expenditure while clearing your debt as fast and as much as possible because I'm pretty sure that the interest on your debt is a bigger killer than the principal (read: compound interest when stacked against you is bad news).

Good luck and all the best!​​​

First most important question - what are the interest rates on the personal loan and credit cards? Usually it is 26+% for credit cards, but could vary widely for personal loans.

As you said, your income is not affected by Covid. I am not optimistic that you will be approved for the covid special relief measures (generally all of them have criteria that income drop by 20% or more due to covid).

However, your total debt balance is almost your income for one full year, which I would guess it takes 6 years to pay off.

First step, take a look at singsaver and others for debt management PLANS (DMP) or debt consolidation plans (DCP). You are almost at the 12 month criteria, and try to ask if they could help arrange for the DMP.

If you have no success with that, start looking through the T&C of your loan and credit cards to gather the effective interest rate or annual interest rate. If you need help, call the bank and ask. You will want to target the ones with either the highest interest rates, or small balances that you can easily clear off in a month or two.

If your personal loan rate is lower than 10%, or if you are able to find one that offers lower than the current interest (with small or negligible balance transfer fees + cost), then it will be good to help work around. Check with the bank if they are willing to help with a balance transfer from the credit cards, if so how much is the fees and interest rate. Technically if the effective interest rate is lower than 20%, you are already better off than paying 26% on a credit card, but it helps if you can get one that is 10% or so. You will need as much help as you can get.

But this doesn't work if you continuing to pile on more debt. Look at the cards that you want to clear off and suspend them or cut them up so you don't use them anymore.

Keep a spreadsheet tabling all the debts you have as at last statement dates by the loan and card names, and the total. Track the monthly ending balances, and you need to be sure the total is gradually going down until you have fully paid off.

Constructive suggestions:
1) look for ways to cut cost in your life.

2) If you have debt on more than one credit card, aim to pay minimums on all (without incurring late payment fees), and use the savings from step 1 to make an extra payment on one of them (possibly the one with lowest balance). Doing this over a while will probably help you pay down the card, then you can rollover the amount you have been paying off the card to the next card.

If you can consistently do this, you would likely be able to clear off the debt eventually.