How To Consolidate Debt Without A Loan

How To Consolidate Debt Without A Loan – If you don’t have time to read the whole article, you can check our short version below.

It is a common belief that only big spenders and those who are careless with their money end up accumulating huge debts. But this is not always the case.

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People who have smaller debts but choose to leave them alone can find themselves in the same situation as the money owed to the debtor can add up over time. In other words, too many small credit purchases can turn into a headache before you know it.

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While the main reasons why people accumulate debt vary, it is common for them to be unable to control their spending until it spirals out of control.

There are debt settlement programs in Singapore that help borrowers avoid bankruptcy or be disciplined in paying debts.

The DCP was introduced in January 2017 to offer people a chance to receive discipline on the payment of their debts or obligations. In short, it offers people the opportunity to consolidate their unsecured credit facilities (such as credit cards or other types of unsecured loans) with a participating financial institution in Singapore such as

This means that if you want to get a DCP, your debts will be consolidated and then paid. In return, you must repay the bond by making regular payments over a period of time – often at a lower interest rate.

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For example, credit card interest rates tend to be between 20-26% per year. With DCP, these debts can be consolidated and then paid off with an interest rate of 3.58% per annum or an effective interest rate of * 6.56% per annum.

As DCP aims to help a person reduce their debts, those who want to apply for this restructuring plan through a bank must reduce their unsecured debts to 8 times their monthly income before they can get a new unsecured loan from another bank.

This means no unsecured loans from any financial institution unless you reduce your secured debt to 8 times your monthly income.

However, through DCP, people get a credit card and a monthly loan that helps them facilitate other payments.

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To qualify for DCP, an unsecured debt must exceed 12 months of monthly income.

*Actual interest rate – based on a loan amount of S$63,000 for a 96 month loan period and includes processing fees.

The interest rate offered to you is based on your personal credit profile and may, at the bank’s discretion, differ from the published interest rate and the interest rate offered to other borrowers.

Another debt settlement program available is DMP. It has been offered since 2004 by Credit Counseling Singapore (CCS), a registered charity and agency that helps people dealing with unsecured debt problems.

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Similar to a DCP, a DMP is a monthly installment plan that allows people to gradually pay off unsecured consumer debt, such as credit cards and overdrafts, by adding modest principal and interest fees to creditors over a period of time. In a reasonable time.

However, they differ in that DMP does not consolidate debt under one financial institution as DCP does. Another difference is that, unlike a DCP, DMP recipients would not have the benefit of having a credit card to help make payments easier.

According to CCS, a DMP is appropriate for those who are willing (to avoid bankruptcy) and able (have the money) to pay unsecured consumer debt.

CCS conducts a one-hour debt counseling session with eligible applicants to help identify monthly expenses that lenders can approve before making a payment proposal.

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As such, the monthly installment is within the individual’s service capacity and the applicant must make prompt, complete and regular payments within the repayment period.

In some cases, a person may not be eligible for DCP or DMP. There is another route available, DRS.

This program is aimed at people who are in dire financial straits and may need to explore filing for bankruptcy. DRS is an alternative to bankruptcy. This may be an option if the creditor sues the debtor or if the debtor can voluntarily file for bankruptcy.

If a bankruptcy petition is filed in the High Court of Singapore and the debts do not exceed S$150,000, the court may refer the debtor to the Official Bankruptcy Administrator (OA) at the Bankruptcy Office of the Ministry of Justice, who administers the DRS. assess the borrower’s eligibility and suitability. If the debtor meets the eligibility criteria and the OA deems it appropriate, the OA will assist the debtor in preparing the DRS.

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If the borrower’s DMP or DCP status is not in the public registry, but is registered with a Singapore credit bureau that has data accessible to its members (mainly financial institutions), then the DRS status is public.

Additionally, unlike bankruptcy, individuals have no travel restrictions, have a fixed deadline to pay off their debts, and have the ability to maintain a regular savings account.

Regardless of one’s circumstances, debt tends to grow because spending cannot be controlled until it spirals out of control.

That’s why it’s important to start financial planning early and not wait until debt mounts before seeking help. This is especially important for those who are new to the workforce and accessing credit cards and personal loans for the first time.

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Talk to a Wealth Planning Manager today to review your finances and how you can better plan your finances.

Alternatively, check the Plan & Invest tab in the digital bank to analyze your financial situation in real time. The best part is that you don’t have to worry – we will automatically process your cash flow and give you financial advice.

This article is for informational purposes only and should not be relied upon as financial advice. Before making a decision to buy, sell or hold an investment or insurance product, you should seek advice from a financial advisor on its suitability. Previously, he worked on content editing related to personal and home loans, and auto, home and life insurance. He has been editing professionally for nearly ten years in various fields, with a primary focus on helping people make confident financial and purchasing decisions by providing clear and unbiased information. Connect with Aylea Wilkins on LinkedIn Linkedin Aylea Wilkins

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