How Does A Credit Counselling And Debt Management Program Work?

Debt Management

Where can you go for assistance if you’re drowning in debt? Credit counseling is one solution to this problem, but few Singaporeans are aware of the subject. It’s fine if you have no idea what credit counseling is, or if you don’t know how to apply for a credit card, it doesn’t matter.

Don’t quit even if you’re drowning in debt. You still have a chance to get out of debt in the long run. Going to credit counseling to learn how to better manage your debt is one approach to doing this.

What Is Credit Counseling?

Credit Counselling Singapore provides a variety of financial management and financial literacy services. They provide education, counseling, and debt repayment assistance to help you repay your debt. CCS credit counseling sessions are inexpensive, with a one-time charge of S$30 for each session.

Here’s where you can learn more information about the numerous credit counseling options available.

How Does Credit Counseling Work?

A credit counselor will help you to manage your debt better. The financial counselor will examine your circumstances and advise you on the best course of action. It’s especially important if you’re having trouble managing your debt and need help from an expert.

Credit counseling in Singapore may be obtained in three easy steps.

Step 1: Attend a Debt Management Awareness Program.

CCS offers discussions on how to deal with debt and the dos and don’ts of debt management. You must first complete either their Debt Management Information Talk or Online Debt Management Course. Every weekday evening, the discussions are held, and they also give discussions every two weeks on Saturdays.

Step 2: Submit a Counseling Session Request

You may wish to go on to apply for a counseling session now that you have a better understanding of debt management. If you need specialized debt guidance or want to learn more about the Debt Management Program, scheduling a consultation is a good idea. To schedule a session, fill out a Counselling Request Package.

Step 3: Go to your one-on-one counseling session.

Tell your financial counselor about your financial condition throughout the therapy session. Tell them about your issues and restrictions, and get answers to them. Ask any questions you have regarding financial management and budgeting. They can help you work out what is the best practical solution to deal with your debt problem.

Are you wondering if there are any other options for resolving your debt? Here are some alternatives for you.

What Documents Do I Need For My Counseling Appointment?

These are the financial documents that you will need to send by mail or submit to the CCS office in order to schedule a credit counseling appointment.

Report on Credit

If you’ve borrowed from a licensed moneylender, you’ll need to purchase your credit report online. The CBS credit report will set you back at S$6.42 (with GST), while the MLCB report would cost you S$1.50 ($1.07).

CPF Statements from the Past 15 Months

Make a statement for both your CPF transaction and contribution history. They’re available on the CPF website.

Payslips

Based on your sort of employment, below is the proof of income you’ll need to submit.

  • Salaried employee: last three months’ pay stubs, letter of employment, or personal income tax assessment from the previous two years
  • A commission-based earner, such as a real estate agent or a salesperson: Must provide a commission statement from the previous 12 months or a personal income tax assessment from the previous two years.
  • Self-employed, such as a taxi driver, a private-hire driver, or a freelance tuition teacher: a statement of monthly income earned or a personal income tax assessment from the previous two years.
  • Sole owner, a partner in a partnership firm (LLP), or director of a private limited company (PLC): Company’s bank account statements for the latest three months, and Company’s financial statements for the previous two years, or Personal income tax assessment for the previous two years

Source: Credit Counselling Singapore

What Does A Debt Management Plan Entail?

A Debt Management Plan (DMP) is an alternative to a debt consolidation plan. During the DMP, you must continue to pay monthly installments to all your original creditors. Your creditors may offer you a cheaper interest rate and a longer repayment time under a DMP.

Things to Remember When Applying For A Debt Management Programme

Here are some crucial points to keep in mind before applying for a DMP.

A Debt Management Program’s Eligibility Criteria

For a person to be eligible for a DMP, you must first complete the following requirements:

  • Do you own one or more banks’ unsecured debts?
  • Have at least S$10,000 in total unsecured debt
  • Accounts that have been open for at least a year
  • Have a steady source of income and the ability to pay your creditors on time

Here are some way people get into debt.

The Drawbacks of Being on a Debt Management Plan

Keep in mind that being on a DMP may have an impact on some of your credit facilities. You should be fully prepared for the following when applying for a DMP:

  • Accounts for credit cards and lines of credit will be closed.
  • Any bank will not accept your application for unsecured credit.
  • Your DMP status will appear on your credit record.

Here’s a simple breakdown of the distinctions between a Debt Consolidation Plan and a Debt Management Plan.

Debt Consolidation Plan

  • Does the software combine your debts into a single personal loan? Yes
  • Can you apply for unsecured credit from a bank? No, not until your debt-to-income (BTI) ratio is less than eight times your monthly paycheck.
  • Will you be closing all of your credit card and line of credit accounts? Yes
  • Will it appear on your credit report? Yes
  • To qualify, you must have an annual salary of between S$30,000 and S$12,000. A minimum of 12 times of your monthly income in debt
  • Is it possible to obtain cheaper interest rates and a longer-term one? Yes
  • Will CCS make it possible? No, you must apply for it from a bank.

Debt Management Programme

  • Does the software combine your debts into a single personal loan? No
  • Can you apply for unsecured credit from a bank? No, until the DMP is over
  • Will you be closing all of your credit card and line of credit accounts? Yes
  • Will it appear on your credit report? Yes
  • Income and amount of unsecured debt required to qualify: There are no income requirements. A minimum debt of S$10,000 is required.
  • Is it possible to obtain cheaper interest rates and a longer-term one? Yes
  • Will CCS make it possible? Yes

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