For most of us, taking on debt is an unavoidable part of living in a modern society.
There is good debt, such as an education loan or mortgage, which could help increase your earning power or acquire an appreciating asset. And there is “bad” debt that doesn’t add long-term value to a borrower’s life, such as high-interest credit card debt stemming from discretionary spending, money borrowed for gambling, loans for a lavish vacation or luxury goods, and more.
With that being said, for those seeking help with debt management, various debt repayment schemes and programmes are available in Singapore. These are: Debt Consolidation Plan, Debt Repayment Scheme, Debt Management Programme, and Moneylender Debt Management Programme.
This article will dive deep into the options and identify who they are best suited for. For a more detailed comparison, visit Personal Loan Finder’s debt consolidation comparison page to review the options available to you.
What is a debt repayment programme?
A debt repayment programme helps individuals manage their debt in a structured manner, taking into account the debt amount and the individual’s financial situation.
Each debt repayment option has its own eligibility criteria and purpose. In general, most people prefer taking one of the programmes to help with debt management over declaring bankruptcy, as the latter has far-reaching consequences.
Here’s a quick look at the types of debt repayment plans and debt repayment programmes available.
| Debt Consolidation Plan (DCP) | Debt Repayment Scheme (DRS) | Debt Management Programme (DMP) | Moneylender Debt Management Programme (MDMP) | |
| Type of debt | Unsecured credit and loans, excluding joint accounts, renovation loans, education loans, medical loans | Unsecured loans, including claims filed by creditors to the Insolvency Office | Unsecured loans, including credit card debts, renovation loans, car loans, primarily from banks/financial institutions | Unsecured debts with licensed money lenders, but you must also have debts with banks and financial institutions |
| Nationality | Singaporeans / PRs | Any individual liable for bankruptcy in Singapore | All residents | All residents |
| Debt size | More than 12 times your monthly income | S$15,000 to S$150,000 | Assessed by Credit Counselling Singapore; typically for unmanageable debts upwards of S$10,000 | As assessed during credit counselling |
| Repayment tenure | Up to 10 years | Up to 5 years | 5-10 years | Up to 2 years |
Debt Consolidation Plan (DCP)
A Debt Consolidation Plan (DCP) is designed for individuals with multiple sources of debt, such as unsecured loans and credit cards, who want to combine them into a single debt from a financial institution, thus simplifying the repayment process.
To qualify for DCP, you must:
- be a Singapore Citizen or Permanent Resident
- earn between S$20,000 and below S$120,000 per annum with Net Personal Assets of less than S$2 million; and
- have total interest-bearing unsecured debt that exceeds 12 times your monthly income on all credit cards and unsecured credit facilities with financial institutions in Singapore
Below are the interest rates and fees from the respective banks:
| Debt Consolidation Plans in Singapore | Interest rates/EIR | Fees | Repayment Period |
| DBS/POSB Debt Consolidation Plan | From 3.58% p.a. (EIR 6.56% p.a.) | Processing fee: S$99
Early termination fee: 5% on the outstanding at point of termination Late fee: S$90 |
1 to 8 years |
| UOB Debt Consolidation Plan | From 4.50% p.a. (EIR 8.22% p.a.) | Processing fee: S$0
Late payment fee: S$90 Full repayment fee: from 5% to 8% of outstanding balance |
Up to 8 years |
| OCBC Debt Consolidation Plan | From 4.50% p.a. (EIR 8.06% p.a.) | Late repayment charges: S$200
Termination fee: 5% outstanding loan amount Over the counter payment/deposit: S$25 per transaction |
36 to 96 months |
| HSBC Debt Consolidation Plan | Promotional interest rate: 4.5% p.a.
(EIR from 8% p.a.) |
Processing fee: 1% of the approved loan amount, subject to a minimum of S$88
Early repayment fee: 5% of the redemption amount Overdue interest: 2.5% and prevailing interest on the overdue amount Late payment fee: S$120 for each monthly repayment that’s not received in full by the due date |
1 to 10 years |
| Standard Chartered Consolidation Plan | From 3.48% p.a. (EIR from 6.33% p.a.) | Processing fee: S$199
Early redemption fee: S$250 or 5% of the outstanding balance, whichever is higher Late payment charges: S$100 Default interest (EIR): 26.9% p.a. (minimum) |
3 to 10 years
|
The following financial institutions currently offer DCP (note that new ones may be added/substitued over time):
· American Express International, Inc.
· Bank of China Limited Singapore
· CIMB Bank Berhad
· Citibank Singapore Limited
· DBS Bank Ltd
· Diners Club Singapore Pte Ltd
· GXS Bank
· HL Bank
· HSBC Bank (Singapore) Limited
· Industrial and Commercial Bank of China Limited
· Maribank Singapore Private Limited
· Maybank Singapore Limited
· Oversea-Chinese Banking Corporation Limited
· RHB Bank Berhad
· Standard Chartered Bank (Singapore) Limited
· Trust Bank
· United Overseas Bank Limited
You only need to apply to one participating financial institution for a DCP. Take note that certain loans are excluded from DCPs, such as loans granted under joint accounts, renovation loans, education loans, medical loans, and business-related credit facilities. There are charges or fees when applying for a DCP, which vary among different financial institutions.
Debt Repayment Scheme (DRS)
The Debt Repayment Scheme (DRS) is a pre-bankruptcy programme managed by the Official Assignee (OA) that helps individuals avoid the heavy consequences of bankruptcy.
Unlike other debt repayment programmes, a DRS is only initiated when a debtor or their creditor makes a bankruptcy application in the High Court for unsecured debts of up to S$150,000.
Under the DRS, you can work out a Debt Repayment Plan (DRP) with your creditors to repay what you owe within 5 years, while ensuring your creditors’ interests are protected. At the same time, your creditors cannot take legal action against you.
After meeting your financial obligations under the DRS, you will be released from your debts and able to enjoy a fresh start.
To be eligible for a DRS in Singapore, you must fulfil the following:
- Your total unsecured debts must not be more than S$150,000
- You must be working and earning a consistent income
- Must not have been declared bankrupt or been on the DRS in the previous 5 years
- Must not have been subject to a court-based arrangement in the previous 5 years
- Must not be a sole proprietor or partner in any company
Debt Repayment Scheme (DRS) fees and charges
| What’s it for | Amount | Due |
| Preliminary administration | S$350 | At the submission of documents |
| OA’s review of your suitability for the DRS | S$250 | At the submission of documents |
| Annual admin fee | S$300 per year for the first 2 years, S$350 per year for the next 3 years | At the start of every year of administration |
| Appeal fee | S$100 | At the submission of the Notice of Appeal |
| DRP modification fee | S$50 | On or before the meeting of creditors for the modification of DRP |
| Collection fee by the OA of all payments made by you | 1.5% of the amount collected | |
| Distribution fee by the OA of dividends to creditors | 3% of the amount distributed |
Debt Management Programme (DMP)
A Debt Management Programme (DMP) is a structured repayment plan designed to help people struggling with unsecured debts, such as credit card bills, personal loans, or credit lines.
Facilitated by Credit Counselling Singapore (CCS), a non-profit organisation and registered charity that helps individuals address their unsecured debt problems, debtors will receive credit counselling from a Credit Counsellor. CCS offers the DMP in collaboration with major banks and credit card issuers in Singapore, represented by The Association of Banks in Singapore (ABS).
Suppose you’re deemed to have sufficient payment capacity during a counselling session with a Credit Counsellor. CCS will prepare a DMP Proposal and Repayment Schedule to repay each creditor in affordable monthly instalments, often with reduced interest rates and waived late fees.
To qualify, applicants must demonstrate proof of a stable income and commitment to repaying their debts. The goal of the DMP is to make repayment more affordable and sustainable, helping debtors become debt-free over time without resorting to bankruptcy.
Moneylender Debt Management Programme (MDMP)
The Moneylenders Debt Management Programme (MDMP) is meant to provide debt relief to overly indebted borrowers with a repayment arrangement for unsecured debts with licensed money lenders.
However, take special note that this programme is only available to individuals with both bank and licensed money lender debts, who have been assessed as capable of paying down both debts concurrently.
MDMP is a formal debt restructuring agreement facilitated by CCS with licensed money lenders (LML) represented by Credit Association of Singapore (CAS).
CCS will assess the debtor’s payment capacity and prepare an MDMP Proposal and Repayment Schedule to fully repay each LML creditor in monthly instalments within a reasonable period.
The eligibility criteria for the MDMP include:
1. Sufficient payment capacity, as assessed by the Financial Counsellor during credit counselling, to work out a DMP for unsecured debts with bank creditors.
2. Sufficient payment capacity to repay unsecured debts with LML creditors within a maximum period of two years.
What if I don’t qualify for the above debt repayment options?
As a last resort, you can file for bankruptcy, but you should be aware of the consequences before doing so.
Apart from having your assets vested in a court-appointed trustee and not being able to sell or handle them, being a bankrupt also has other implications and responsibilities.
For one, you will need to seek approval before travelling overseas. You will also need to obtain permission if you’re planning to run a business or company. Undischarged bankrupts will also need to disclose their bankruptcy status when applying for credit or loans over S$1,000.
There are also some positive aspects. You’ll breathe easier as your debt stops accumulating, creditors cannot sue you for your debts, and your monthly repayments will be lower than if you had to pay off your creditors on your own.
If bankruptcy is not an option, consider reaching out to family or friends who may be able to help with a personal loan.
Conclusion
In summary, effective debt management requires considerable effort and resources on the part of the debtors. That’s why it’s essential to get your financial basics right and practise good financial habits, such as spending within your budget, setting an emergency fund, and borrowing within your means to repay the money sustainably.
Looking for options to manage your financial commitments? Find out if you qualify for a private personal loan, or get in touch for more options.
