<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Oct 25, 2008
WARNING TO SINGAPOREANS
</TR><!-- headline one : start --><TR>Reduce debts
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->MONETARY Authority of Singapore statistics show Singaporeans have piled on debts at a fast rate up to August this year.
Total debts to individuals and professionals stand at $112 billion, almost 10 per cent up in the past 12 months. In particular, credit card rollover debt has ballooned to $3.3 billion, an increase of $296 million over the past 12 months against a $94 million increase in the previous 12 months.
It is not just credit card debt that has increased. Housing loans are up $6.6 billion. There was also a $2.5 billion (18.4 per cent) jump under 'other loans' to individuals which presently stand at almost $16 billion. The previous year's increase was only $584 million in this category.
Going into a recession with such high debts will push many into financial difficulties as jobs and incomes are affected.
Individuals need to make every effort to reduce or restructure their debts, especially credit cards and credit lines which are expensive and recallable. They should stop using more credit. Unsecured debts can be converted into instalment loans that can be paid over a longer period. Financial institutions should be more accommodating in approving such requests.
The problems of delinquent borrowers are exacerbated by heavy over limit and late payment penalties, which can add up to more than 50 per cent on an annualised basis. Although these penalties encourage borrowers to pay promptly, such high charges can also make it impossible for a defaulting borrower to be current again, let alone pay off his debts.
Collection procedures by creditors should exclude tactics which amount to undue harassment and intimidation. For example, phone calls during working and unreasonable hours should be curtailed. Writs of seizure and sale which are costly and usually realise little proceeds should be stopped. Lawyers should not write to employers stating that they are acting on behalf of an unnamed financial institution and asking for verification of employment and other details as this will trigger inquiries by employers which can often affect the career of the employee concerned.
A code of conduct for debt collectors should be drawn up and adhered to by lenders and their outsourced agents.
The Government should also accelerate implementation of the debt restructuring scheme, which is designed to give wage earners an alternative to bankruptcy. Kuo How Nam
President
Credit Counselling Singapore
WARNING TO SINGAPOREANS
</TR><!-- headline one : start --><TR>Reduce debts
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->MONETARY Authority of Singapore statistics show Singaporeans have piled on debts at a fast rate up to August this year.
Total debts to individuals and professionals stand at $112 billion, almost 10 per cent up in the past 12 months. In particular, credit card rollover debt has ballooned to $3.3 billion, an increase of $296 million over the past 12 months against a $94 million increase in the previous 12 months.
It is not just credit card debt that has increased. Housing loans are up $6.6 billion. There was also a $2.5 billion (18.4 per cent) jump under 'other loans' to individuals which presently stand at almost $16 billion. The previous year's increase was only $584 million in this category.
Going into a recession with such high debts will push many into financial difficulties as jobs and incomes are affected.
Individuals need to make every effort to reduce or restructure their debts, especially credit cards and credit lines which are expensive and recallable. They should stop using more credit. Unsecured debts can be converted into instalment loans that can be paid over a longer period. Financial institutions should be more accommodating in approving such requests.
The problems of delinquent borrowers are exacerbated by heavy over limit and late payment penalties, which can add up to more than 50 per cent on an annualised basis. Although these penalties encourage borrowers to pay promptly, such high charges can also make it impossible for a defaulting borrower to be current again, let alone pay off his debts.
Collection procedures by creditors should exclude tactics which amount to undue harassment and intimidation. For example, phone calls during working and unreasonable hours should be curtailed. Writs of seizure and sale which are costly and usually realise little proceeds should be stopped. Lawyers should not write to employers stating that they are acting on behalf of an unnamed financial institution and asking for verification of employment and other details as this will trigger inquiries by employers which can often affect the career of the employee concerned.
A code of conduct for debt collectors should be drawn up and adhered to by lenders and their outsourced agents.
The Government should also accelerate implementation of the debt restructuring scheme, which is designed to give wage earners an alternative to bankruptcy. Kuo How Nam
President
Credit Counselling Singapore
