Debt FAQS

Question I have tried to make a budget and follow it, but it always seems to fail and my debt keeps growing. How can I make a budget and then stick to it?
Answer Making a budget and sticking to it requires honesty, determination, and support. The links provided will take you to detailed worksheets and other information to get you started and help you every step of the way.

Additional Tips to Remember:
  • Be honest with yourself: Admit you have a problem and that only you can solve it by creating a budget and sticking to it. To determine whether you have a problem with debt, take the Debt Warning Signs Quiz.
  • Make a complete and honest list of all your debts and expenses using the Assess Your Debt calculators. Create a realistic budget, one that will cover your needs and will enable you to start paying off your debt, and get you on track to begin saving. Set attainable goals and a timeframe to achieve those goals.
  • Stop spending. At first this may be hard, but over time healthier financial habits will become easier. Be honest about things that you absolutely "need" vs. things you "want." Understand that not spending on things you want may be hard, but that it will bring its own rewards as you start feeling positive about getting out of debt. For more information, visit Paying Off Your Debt.
  • Realize it is not easy, and don't get discouraged. It takes determination and requires making some sacrifices. It took time for you to get into debt, and it will take you some time to pay off your debt. If you stick to your plan, you can do it.
Concentrate on all the benefits of a debt-free life, and decide that this time, you are going to achieve your goal. To learn about the fundamentals of debt, review the section on Debt Basics.
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Question I feel like I am accumulating too much debt but don't know if I am really in trouble or not. How can I tell?
Answer If you think you are getting into debt trouble, you probably are. If you are spending more money then you are taking in each month, you are accumulating debt that will quickly add up. And, if you haven't saved for those unexpected occurrences that happen to all of us — like a leaky roof, a health problem, or a car breakdown, you may have incurred large debt. Some common symptoms of debt trouble include paying only the minimum due, paying late, or missing payments altogether.

Additional MasterCard Resources: Debt Warning Signs Quiz Causes of Financial Crisis Helping Friends and Family
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Question What can I do if I am unable to make even the minimum monthly payments on my credit card bills?
Answer As soon as you realize you cannot make even the minimum monthly payment on your bills, contact each lender right away and explain your situation. Make an effort to arrange with the lenders to repay debts by instalments or to reschedule your repayments. You may also wish to request for an extension of time to liquidate your assets or seek other financial sources to repay the debts.
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Question I have received new lower interest rate offer for my credit card in the mail. Should I look at moving my outstanding balance?
Answer

Depending on the offer, and on your particular situation, it may or may not be a good idea to take advantage of a lower-rate credit card offer. A lower interest rate can help you pay off your debt more quickly because less of your payment goes to interest and more of it goes to reducing your debt.


However, it is very important to study the details of the offer: whether the lower rate is permanent or an "introductory" rate that will rise after a specific length of time, such as six months; and whether the lower rate is "variable" or "fixed." Variable rates are often tied to the prime rate, and rising long-term interest rates could lead to an interest rate that is actually higher than the one you already have. You should also check for fees for transferring balances and any other charges that you may incur. Also check the terms and understand how, if you make a payment late or fail to make a payment, the interest rate will automatically go up, and, if so, to what percent.


In short, be aware that transferring unsecured debts to lower interest rate facilities is only a temporary measure. Preferential interest rates have limited life-span, as they usually revert to the original interest rates after promotional periods.
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Question What are the biggest mistakes people make when trying to pay off their debt? How can I avoid them?
Answer The biggest mistakes people make when trying to pay off their debts are:
  • Thinking that it is going to be too hard and thus not trying
  • Thinking that it is going to be easy and then giving up quickly or making bad choices

Paying off debt can be one of the most difficult things in one's life, and it may take years to achieve. But it is possible. And the rewards are worth it.

Filing for bankruptcy will affect your credit as the information will remain in your credit report for a period of 6 years from the date of discharge from bankruptcy.
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Question If I feel I need professional help to get out of debt, where can I go and whom can I trust?
Answer A good place to start is Credit Counselling Singapore. Guidelines on how to find good help and avoid fraud are provided in the Getting Help section
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Question I lost my job and don't have any income coming in, what can I do about my bills?
Answer Losing a job is traumatic and dealing with your bills can seem impossible or be the last thing you feel like doing. However, acting quickly can mean the difference between being able to manage your bills and getting into debt trouble.

First, stop spending and start saving money where you can. Then, if you cannot pay your bills, contact your creditors. Tell them about your situation and ask whether you can arrange a repayment schedule or extension of time, or both to help you stay current on your bills until you have income coming in again.

By contacting your creditors as early as possible, instead of waiting until you miss or are late with payments, you can avoid late fees and penalties that will make your debt situation worse. You also may want to seek the help of Credit Counselling Singapore.
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Question There is no way I'm ever going to pay all my debts. Should I file for bankruptcy?
Answer Bankruptcy should be considered only as a last resort. The process is lengthy, complex, and expensive, and it leaves a significant black mark on your credit record. A wage-earning debtor with debts not exceeding $100,000 can enter a debt repayment plan under the Debt Repayment Scheme with his creditors and avoid bankruptcy.
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