Debt Settlement in Singapore: What Are Your Options?

The concept of debt is often associated with reckless spending. However, this is not always the case. When left unattended, small debts can quickly spiral out of control. While there are many reasons why people can find themselves sinking into debt, the key to tackling the issue is to acknowledge the existing problem.

Today, we will be going through some of the debt management options to help you formulate a plan to address your debt issues.

Debt settlement appeal

The first and simplest method on the list would be debt settlement appeal. This is a self-administration approach where you contact your creditors directly (often in the form of an appeal letter) to appeal for an affordable instalment repayment plan.

In the letter, you would have to explain your financial situation and propose a repayment amount that you can afford to fully repay the debt owed. Do make sure to attach relevant supporting documents such as income and CPF statements to aid your appeal.

However, note that this option is only viable if you have debts owed to one or a few creditors.

Discounted lump sum settlement

You can consider the option of discounted lump sum settlement if you can raise a sum of money. Approach your creditors directly to offer a final settlement of your debt through a lump sum payment. Depending on how much you owe and the amount you have raised, you can negotiate to settle at an amount less than what is owed.

This method is non-guaranteed and would be subjected to your creditors’ approval.

Debt consolidation plan

Introduced in January 2017, the Debt Consolidation Plan (DCP) is a debt refinancing programme that allows you to consolidate your unsecured borrowings* across various banks into a single loan with 1 participating financial institution.

By combining all your loans that are charging higher interest into a single loan with a low-interest rate, you are able to reduce the amount of interest paid. Hence, alleviating some of the existing financial burdens. Another upside is the convenience of paying to one channel instead of paying each loan individually.

Under DCP, you will also be given a revolving credit limit capped at your monthly income to allow you to spend on daily essentials. However, utilising this credit means that you are adding to your overall balance so make sure to spend wisely.

Currently, only Singaporean Citizens and Permanent Residents with annual income between S$20,000 to S$120,000 with Net Personal Assets of less than S$2 million are eligible for DCP. Furthermore, the total interest-bearing debt must exceed 12 times your monthly income.

If you fulfil all the criteria, you can apply with one of the following 14 participating financial institutions that provide the DCP:

  1. American Express International, Inc.
  2. Bank of China Limited Singapore
  3. CIMB Bank Berhad
  4. Citibank Singapore Limited
  5. DBS Bank Ltd
  6. Diners Club Singapore Pte Ltd
  7. HL Bank
  8. HSBC Bank (Singapore) Limited
  9. Industrial and Commercial Bank of China Limited
  10. Standard Chartered Bank (Singapore) Limited
  11. Maybank Singapore Limited
  12. Oversea-Chinese Banking Corporation Limited
  13. RHB Bank Berhad
  14. United Overseas Bank Limited

* Unsecured borrowings refer to debts with no collateral, such as credit card loans and personal loans.

Debt management plan

Offered by Credit Counselling Singapore (CCS), the Debt Management Plan (DMP) seeks to provide an alternative for individuals who find themselves in serious financial distress.

Represented by The Association of Banks in Singapore (ABS), the DMP is a formal consumer debt restructuring agreement facilitated by CCS with major consumer banks and credit card issuers in Singapore.

Under the DMP, CCS will help you draft out a DMP Proposal and Repayment Schedule for you to repay your creditors via affordable monthly instalments at a reduced interest rate and over a reasonable timeline.

However, unlike DCP, debts are not consolidated if you are under DMP. This means that you would still have to make payments to each creditor according to the agreed repayment schedule. Another difference is that you are not given revolving credits.

To be eligible for DMP, one must have unsecured debts of S$10,000 or more owing to two or more creditors. Applications are made through CCS where you would be required to attend an Onboarding Session with talks on debts and money management. After which, you have to go for a 1-to-1 financial counselling appointment whereby your suitability for the program would be determined.

Debt repayment scheme

Targeted at individuals who are in dire financial positions and on the verge of bankruptcy, the Debt Repayment Scheme (DRS) allows you to repay your debt within a set timeframe with no additional interest charge.

If you are not eligible for DCP or DMP, DRS is the final lifeline that can prevent your creditors from taking further legal action against you. To be eligible for DRS, you must meet the following criteria:

  1. Total liabilities between S$15,000 and S$150,000
  2. Gainfully employed and earning regular income
  3. Not a sole proprietor or a partner in any firm
  4. Do not have an undischarged bankrupt
  5. Have not been on the Debt Repayment Scheme in the last 5 years
  6. Have not entered into a voluntary arrangement with your creditors in the last 5 years

Under the DRS, you will be assisted in coming up with a suitable repayment timeframe by a court-appointed officer, otherwise known as the Official Assignee. You will have to enter an agreement to make monthly repayment for up to 5 years. Do note that you are liable for the fees payable to your Official Assignee and other relevant administrative fees.

Read more: Everything You Need To Know About the Debt Repayment Scheme


If all else fails, your only option is to file for bankruptcy. There are many reasons why declaring bankruptcy is regarded as a last resort and generally avoided by individuals and institutions. Apart from having a public record, you would have to give up your assets as well as any plans of travelling overseas. Your credit score will also be in the worst state possible and could take years to rebuild back to a normal level.

That said, there are many schemes such as the abovementioned to prevent you from filing for bankruptcy. However, it is not the end of the world if you find yourself in such a situation. Many have come out of bankruptcy and started afresh. Hence, it is important to know your rights and seek professional help.


The available options that we have discussed today are merely tools to help you on your financial recovery journey. Keep in mind that they will not automatically solve your debt problems. The key to debt settlement lies in your determination to stick to your plan and your consistent efforts would be rewarded.

Likewise, it is crucial for you to learn to implement a budget and use credit responsibly. Else, even if you can recover from a small financial setback, you will soon find yourself falling into the same debt trap as before.

Planner Bee has all the resources you need to help you stay on track financially. For starters, you can consider how to create a personal budget you can actually stick to.

Read more: Quick and powerful tips to clear your debt quickly

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