Thinking that a bit of debt won’t hurt, you decide to make that first purchase on your credit card. But before you know it, your credit card debt has piled up one after another. While it is true that credit cards come with many benefits, they could spell out financial disaster when used irresponsibly. Find out more on the best
It may come to a point when you feel like you are only working to pay an endless cycle of debt. Ultimately, these debts will prevent you from reaching your financial goals and even lead to stress and other health problems. You may also risk losing your savings or your retirement funds when this happens.
So, if all these things have become a familiar situation to you, read on as you may be one or know one who needs help through credit counseling.
What is Credit Counselling?
Credit counselling is the process of working with certified credit counselors to work out a debt management plan for your unsecured debts. However, their services are not only aimed at helping people get out of debt but also at improving overall financial literacy.
So, if you are struggling to pay credit card debts, need help with simple budgeting, or have complex problems like bankruptcy, credit counselling may benefit you.
Typically, credit counselors provide services such as
- Advising on basic to advance money management
- Facilitating a debt repayment arrangement or a debt consolidation plan
- Setting up a debt management plan
- Negotiating with creditors for lower interest rates.
You may avail of credit counselling services through Credit Counselling Singapore (CCS). They are a trusted and non-government agency that is recognized by the Association of Banks in Singapore .
CCS offers free public talks and educational resources on debt issues. You may also access their services through scheduled workshops or paid financial counselling sessions. If you need immediate assistance, you may work with one of their trained credit counselors directly to create a debt management plan for you.
What Is The Credit Counselling Process Like?
Generally, you may avail of credit counselling sessions through a personal visit, a consultation online, or via phone call, which takes about an hour or so. Credit counselors will ask you to share relevant information such as
1. Personal Details. Data needed includes name, address, contact numbers, etc.
2. Financial Situation. You’ll be sharing information on your income and assets.
3. Expenses. Be prepared with a detailed list of your expenses such as rent or mortgages, bills, taxes, and basic expenses like food and clothing.
4. Credit Report. This report is polluted out to review all your existing credit card debts and other unsecured loans.
Using the information you’ve provided, the credit counselor will give recommendations on how to improve your budget depending on their analysis. The credit counselor will offer a personalized debt relief solution or a debt management plan if deemed appropriate for those with heavy debts. Be assured that all information is kept private and confidential.
What Are The Services Offered By Credit Counselling Singapore
Debt is a challenging and stressful issue among many Singaporeans. Thus, Credit Counselling Singapore helps address this through its many services. One of its objectives is to empower creditors and restore dignity by assisting them in solving debt problems through its programs and services.
CCS’ services are divided into two categories, namely, debt management programmes and financial education programmes.
The table summarizes the various services offered by Credit Counselling Singapore.
Who Can Avail
Those who need one-on-one counselling
Debt Management Programme
Individuals whose debts range S$10,000 and up
Enterprise Credit Counselling Credit Programme
Businesses whose debts do not exceed S$500,000
Financial Education Programme
Financial Literacy Talks and Workshops
Cents-ible Retirement Programme
Specialized for individuals aged 50 and up
Debt Management Programmes
Contact Credit Counselling Singapore and consider a debt management program as soon as you think that your financial situation is going in the wrong direction.
1. Informative Talks on Debt Management
These talks cover general topics on unsecured debt. Whether in bad debt or not, everyone is welcome to join these talks. CCS discusses relevant topics to help you learn various options available concerning your debt problems.
Debt management talks are free and are held daily through webinars on Mondays to Fridays evenings and every other Saturday evening.
2. Financial Counselling
Personalized financial counselling sessions will help you determine a proper solution to your current financial situation. To achieve beneficial and pertinent advice, you have to be transparent about your financial situation.
CCS charges a one-time fee of S$30 for this service. If you can’t afford the payment at the time being, CCS will help you with it.
3. Debt Management Programme (DMP)
CCS offers the Debt Management Programme to those facing major financial problems and struggling to pay debts and daily expenses. The criteria to qualify for DMP are:
- A total unsecured debt of at least S$10,000
- Having credit account/s with a minimum of one year
- Having personal unsecured debts with multiple banks or financial institutions.
In addition to the criteria above, you have to attend the Information Talk on Debt Management and complete CCS’ Online Debt Management Course.
If you qualify for this program, you will enjoy benefits like an extended repayment period and lower interest rates. With the DMP, Credit Counselling Singapore will facilitate a debt repayment scheme between you and concerned credit card companies or other creditors.
Note, however, that under the program, all your existing credit lines will be terminated. Additionally, you can’t apply for any additional unsecured loans with any credit facility. Your credit report will also reflect the DMP status and will only be removed until the completion of the program.
4. Enterprise Credit Counselling Credit Programme (ECCP)
ECCP helps small business owners who are in debt and whose businesses are no longer sustainable due to unsecured debts. CCS will also help business owners understand their financial liabilities and obligations once they are terminated. To qualify for this program:
- Unsecured debts should not exceed S$500,000
- Business assets should not exceed S$1M
- The business is already terminated or in the process of closing down.
Financial Education Programmes
Aside from Debt Management Programmes, CCS also offers financial literacy tools to interested individuals. Under this category, they have
1. Financial Literacy Talks and Workshops
Expect talks on various topics like:
- Money management skills
- Responsible credit use
- Coping with work transitions
- Preparing financially for essential life events
- Other issues on financial literacy
2. Cents-ible Retirement Programme (CRP)
The CRP is a specialized program for individuals aged fifty years old and above. This program aims to help them plan for retirement through financial counselling and help them build their resources and assets for retirement.
When To Consider Credit Counselling
Essentially, people who are facing financial difficulties, often those who are over-indebted seek credit counselling in the hopes of becoming debt-free. Yet, as many people get smart, many seek credit counselling to avoid further financial mistakes and build better money habits.
Below are some situations where there may be an urgent need to consider credit counselling:
1. You struggle to pay your debts.
The struggle to pay for debts brings about worry and stress. When this happens, it becomes even harder to manage your finances. If you can’t cope with high monthly repayments on unsecured loans, a certified financial counsellor may help you.
They will negotiate with creditors for a reduced monthly payment depending on your monthly income and your current financial situation.
2. You don’t have savings.
Aside from debt problems, lack of financial managing skills is one of the reasons why some are not able to save. A credit counsellor can give you advice and practical solutions to help you set aside funds for your savings account.
Some solutions may include:
- Changing your spending habits
- Setting aside a fixed percentage for your savings
- Looking for opportunities to save
- Finding additional sources of income.
3. You want to work on a retirement plan
Building your retirement nest egg is another critical financial issue. If you want to retire comfortably, you need to plan financially carefully towards your retirement. Age. Credit counsellors can help you plan this by sharing concrete ways how to build, grow, and protect your money.
How to Apply for Credit Counselling in Singapore?
Applying for a credit counselling session with Credit Counselling Singapore involves easy steps:
1. Attend CCS’ debt management webinar.
2. Submit a credit counselling request by accomplishing a request form online through their website.
3. Submit supporting documents so that CCS credit counselors can review your case. These documents include:
- The Latest 15-month CPF statement
- Income statements
- Your credit report
After this, CCS will contact you to arrange a credit counselling appointment.
Will Your Credit Rating Be Affected Under a Debt Management Programme?
CCS’ Debt Management Programme may take a huge pressure off your chest. Still, it comes with a few repercussions like not being able to take any kind of loan for the time being and a negative hit on your credit rating.
Getting under a DMP will lower your credit score because you will be paying your debts at a reduced monthly repayment. With this, creditors and some financial institutions will see you as a high-risk borrower. The credit counselor will also ask you to close your accounts.
This move will affect your credit utilization ratio and subsequently affect your credit score. Moreover, these records will stay on your credit report for as long as you are under the program.
However, with a DMP, we can say that the benefits outweigh the risks and will create better results in the long run. This is because a DMP will help you get financially back on track by helping you clear your debts easier.
Learn more on how to achieve higher credit score in Singapore!
Best Debt Consolidation Plans in Singapore
Like CCS’ Debt Management Programme, debt consolidation plans from banks could also be an option for individuals with heavy debts. But, it will only work for those with good credit scores and manageable debts. With a debt consolidation plan, you’ll be able to combine all your unsecured debts from various banks into one bank and get easier repayment terms.
However, it also comes with a set of criteria to meet:
- The borrower should be a Singapore Citizen or a Singapore Permanent Resident.
- The total accumulated debt should be at least twelve times of monthly salary.
- Your annual income should be between S$20,000 and S$200,000 and net assets should not exceed S$2M.
You may also avail of debt consolidation plans offered by various banks in Singapore. We’ve listed some of the best options with loan tenures ranging from one to ten years:
|Bank||Total Amount Payable||Interest Rate||Processing Fee||Monthly Repayments|
|Bank of China||S$35,400||6.00%||S$600||$983|
There’s really no easy way to paying for debts, especially if it has piled up from one credit line to another. If the debt problem gets too overwhelming and interferes with your daily activities, don’t be afraid to seek help. There is nothing to be ashamed of in consulting a credit counselor. After all, for many years, credit counselling has been an effective tool to address debt management problems.
- Getting out of debt is possible but it may take time depending on a person’s financial circumstances.
- Credit counselling can help prevent extreme situations like bankruptcy.
- A debt management plan offers less risky solutions to debt problems compared to debt settlement plans.
- Trained credit counselors will analyze your personal financial situation before making any recommendation.
- Before entering any agreement with a credit counselor, make sure that you understand the terms and keep up with them.
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