This is a C. N. A. Podcast. Can
you give us your quick thoughts on the following credit cards?
This is not your money buy
now pay later
by only you have provided for it.
YOLO spending.
You live only once you do want to live in debt
debt spiral.
You want to climb up. You have to make the effort good
debt versus bad debt.
All debts, you must know that you can pay before you take on.
Thank you. Thanks for joining us on money talks. I'm Sara al Khaldi. Have you seen something online that you simply had to have and bought it? Even if you didn't have the cash for it? That's where a range of credit comes in credit cards installment payments and by now now pay later schemes. There are so many options. If
you really want to make that purchase. What we may not know is that it could come at a heavy cost in the end pushing back payments can become a pile of debt that can also get out of control. So what do a few late credit card payments turn into a serious problem? What can you do when you fall behind on your bills? And it's all debt really bad with us to talk all about. This is Tan Women of credit counseling Singapore. It's an independent nonprofit social service
agency that provides financial counseling and debt management services. Thanks so much Raymond for joining us today and thanks giving us your time now. I'm sure you've heard all kinds of stories when it comes to debt problems, especially with the work that you do. What was the biggest debt issue that you've encountered,
The debt size. Right. I think it was about two million unsecured borrowing. So it's a lot of money, mortgage and everything. It's about two million. And in fact We have a handful of people going $12 million dollars that we actually managed to work out repayment arrangement for them.
It's a big commitment for them to pay of course, with the support of their families, not the families members helping them to pay, but the family members will take care of the household expenses so that the person can use his own earnings to make the repayment. Yes, they do $2 million dollars um sums related to gambling. As you know, once you touch on gambling, it's a lot of money and of course some of them, they say they lost in stock market, so they punch in
that sense. So once you touch on this type of investment or gambling, that size is usually very huge. Generally speaking bigger than other people who are more like spending or do the job or due to other reasons?
How often do you come across people with serious debt problems? And is there a certain type of person that would fall into this or do they come from all walks
of life? All walks of life? Being in debt doesn't mean that the persons are not educated or not financially savvy. We see clients from people who do not have a lot of education to people who are university graduates and post grads. We see people who are earning not a lot of money. There were people who used to earn better income that qualify for credit cards and subsequently, because of employment issue and whatever other issue,
Their income drops substantially. So when they came to us they may be earning less than $2,000 a month, but we also have people who earns five figures a month to come to see us. Yes, it's really all walks of life because the thing is getting to that is
normally not due to just one reason. It's normally a few reasons it could be employment related meaning Picard when times is not good, just like covid time, people are asked to work three days week off for this week and your income will drop substantially, but commitments already made and it's good spending
is already high or is
already there. But it's more of the commitments spending, you can do something about it to a certain extent, but commitments, meaning that you already taken up a few loans that you need to service that we will have to continue to pay even during covid time. So if I have very high commitments, I will find very challenging
if I have a pay cut. But this is of course job loss and if I do not really have a lot of savings that can see me through until I get my next job, that means people will rely on credit facilities to take care of their living expenses of course there are other reasons like overspending basically spending without planning and of course there are also some unfortunate reasons that could be due to a sudden medical bill that is really huge and perhaps there's no sufficient insurance coverage or no
coverage at all. There are also other reasons like the person is really kind. So the friends of the family members come and ask him for a loan and then he doesn't have savings himself but he wants to help. So he take credit facilities to give up the loan or agreed to be a personal guarantor. Now the friend of the family members may not be a bad person who borrowed and didn't want to repay.
But the problem is the person really got no way to repay you, but you are the person who took up the loan, You are the personal guarantor, the creditors will come after you because you are the one who borrow it
here in Singapore. A lot of us have that mortgage payments for example, some have personal loans for renovations, weddings, credit cards are quite common. So when does that
become a problem? Pretty much everyone borrows that become an issue is that the outstanding amount is increasing over time. That means I'm going more and more that is
taking up more
because I'm boring more and it will be a serious problem when I can't even service my debts or I'm actually borrowing to service my debts? That is really a problem. And if my creditors start calling me that is a serious problem, then of course the most serious one is when my creditors actually take legal actions against me because of me not making payment promptly or not making any payment at all.
So there are different stages. But the red flag is when I look at my money statements, it keeps growing and I actually have to use credit to pay for my living expenses before my next paycheck. But of course I said, once the phone starts coming, that is definitely that
you talked about the reasons why people find themselves in debt problems. Are there similarities among the people who have this problem? Because you mentioned they could come from all walks of life, they can have big paychecks from your experience or their similarity.
I can say that they really have a similarity because it can be arranged in terms of their earning capacity in terms of their education level. But I would say the majority of them, 60, of them, there are more males than females really why the men tends to spend on big items, like maintaining a car. Yes. And maintaining current Singapore is really expensive
increasingly now we are seeing buy now pay later schemes. On one hand, it helps people who are trying to make a big purchase without really burning a hole in their pocket. Interest free is what they call it as well. But has it led to overspending here in Singapore and how can we protect ourselves from spending too much?
We don't really have data on this B. M. P. L. And my understanding buy now pay later at this juncture. I don't think there are many expensive items that you can really buy now. Pay later. That said even small amounts can become a problem. If I buy many things under B. M. P. L. It could add up to a substantial amount if I buy one item $300 to repay over three months, $100 per month. I can not a problem. Then I go and buy another
item $600 spread over three months. So it's $200. I think I still can manage 200 but I forgot already committed 100 then now 200 it becomes 300. If I'm not very clear about my cash flow position and things like that. In reality maybe I can only commit up to 100, but now I got $300 to service and I continue to spend as per normal then I may find I may not have enough money. You know then the thing is that if I got savings,
okay I used my savings to paper. If I don't have savings that I may actually find money too tight or money not enough. So making too many commitments at one shot during a short period of time it can become a problem. So it's not that you can't buy things. It's just that when you buy you need to know do you have the money to service it? If you buy it on installment payment? You
talked about when debt is a problem? And the red flags that we have to watch out for? What point does it become out of control that you really need to go seek help
if I really notice my outstanding keep going up and not down. I should be sitting down to take stock and see whether I need to stick up or not. If I receive a phone call from my creditors definitely value and do something about it or the fact that I need to apply for new credit facilities in order to take care of my expenses to make payment to my assisting credit facilities. That is definitely time to do something about it.
What can they do?
Of course they can come forward to credit counseling. Singapore for assistance. We hold a weekly talk on how to manage a debt problem. Every week we have an english version either once to twice a month. We have a chinese version is free of charge. Go to our website www dot c C S dot org dot S G. We will talk about the dues and the don's. We'll talk about what are the options available to address the debt problem. We also talk about if I can't service my debts.
What possible collection actions I may face. But assuming after attended to talk, you are still confused or you would like to speak to someone just to get a new treated party opinion. You are most welcome to fill up the counseling request package so you can have a private session with our credit counselor. And the credit counselor will help you to stop take and work with the borrower to draw up a monthly living expense budget and help them to work out a
repayment arrangement to their creditors. We will then drop a proposal to submit to his creditors on his behalf and then the creditors will then decide whether they are prepared to accept what he proposed if the creditors except what he proposed then now the ball is in his court. He just need to make payment according to what he has proposed and as long as you make the payment in full on time every month, he can see himself become debt free a few years down the road. But at the
end of it, you still
need to pay the debt. Of course people who chose not to pay their debts. They will have to face consequences meaning facing legal actions that includes being made a bankrupt. Hi, I'm Adrian Tan and I'm Christina robert. We are the host of a new podcast called
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some people might think, oh I have a debt problem, let me just file for bankruptcy. What are the implications?
Okay, I think bankruptcy should be seen as the last resort to manage the debt problem. If a person have a debt problem, I would strongly suggest that the person find alternative solutions If all solutions has been explored and didn't work, of course the person may want to consider bankruptcy. Other solutions include talking to your creditors directly. Some creditors may offer you their own in house debt relief plan. If that helps, then there's no need to go for bankruptcy.
But assuming you can't work things out with all your creditors and you have nothing that you can sell to raise funds. Of course you can come forward to credit counseling Singapore if you are suitable and you want it, we can put up a debt management program. But assuming the person can't even worked out a debt management program to us and no other ways then of course bankruptcy is a solution, bankruptcy record is publicly searchable. So if you do not want to have record, do not take it lightly.
It doesn't mean that I don't have to pay my debts, I still have to pay. It's just that because I'm not able to pay under the standard terms and conditions, I will be probably asked to pay a fraction of it as a bankrupt. I do have to be mindful. For example, I can't travel without first getting permission and for some people depending on their professions, it could become a hindrance ba because I may not get my license renewed if I
am a bankrupt. So they're our responsibility expected of a bankrupt on top of making the money contribution and target contribution. In order for me to get this charge with record removed.
What's the worst that can happen if you try to just escape your debt or not handle it as you
should. Of course you're dead size will get bigger to the extent that the creditors probably will also take legal action against the person which could be rich or seizure and sale someone will go to the house of the borrower place. Tickles on the items that have been seized. Of course you cannot remove those items because it's been seized right. If no payment arrangement is being made monday, the Ganga ni men secondhand goods buyers will go to the house together with the Bay leaf the auction to
sell away the items. Yeah, they have the right to sell away. It could be very traumatizing because this is done at the home. Yeah. If you've got neighbors, it's possible that your neighbors be seed. If you do not want to face that type of situation then I think the person should try to make arrangements to repay the creditors so that the credits will take this action. The other possible action is to sue the
person bankrupt for people who are bankrupted. We have launched a new service, a support programs for the bankrupt and their families. It is what we call the bankruptcy rehabilitation program. We will help them to draw up a money budget that helped them to meet their money contribution and target contribution so that if they meet their M. C. T. C. They can see themselves getting discharged and having their record removed from publicly searchable records. People with a money issue
whether bankrupt or not. They have a lot of stress especially the bankrupt newly bankrupted individuals. There's probably a lot of emotional turmoil and relationship issues. So we have talks that teach people how to better manage their relationship problem, their mental stress and psychological stress. And we have a unit they can talk to the bankrupts and the backups family to ascertain what are their other needs so that we can do referral for them to seek help from other agencies and
then they can get out of it too. That's the
hope and get out of it and get the bankruptcy record remove from publicly searchable records.
What if it's your friend or your family member that's in a debt problem, maybe not you, but what can you do to help other people? Sometimes they realize the situation. Sometimes they don't.
If you know of a friend who actually in debt but he is in denial, which often times that's what happened. I have family members calling us. Can you please help my so and so we say that we can't help him unless you want to be helped you because the debt is under his name. No one can do anything. Of course you can help him to pay. But we all know it's not helping because once you help him to pay, chances are again, based on our experience is that people who get into
debt again because their families help them to pay. Right. And sometimes the family members is actually in no financial position to help. So the family members go and borrow that is even worse. So now there's not just one person in that, but two persons are in debt. Even if the family members has got financial capacity to help during speaking the person in that many times, they don't learn from this experience. Very likely they will get into trouble again. So there's
no end to it. Of course you can talk to the person make some agreements. It's not going to be easy. I can imagine it must be really tough because first of all, the doctor is in denial. The person can get angry and not cooperative. So being a friend of being a family member really have to be very patient
if you're someone who's vulnerable or easily tempted to borrow or use credit cards and take up loans. Is the solution just using cash and not taking up any that as much as possible?
Yes, I would say so. If the person is really very what they call impulsive, compulsive to make purchases frankly speaking, I don't have any credit cards because if you don't have the cuts with you, you can buy things that you don't have cash to purchase. And the worst scenario is that you use up your savings because you still have your debit card, right?
But at least you don't have a credit issue. Of course, you still have to find a way to see how to leave the balance day until you get your next paycheck. But I think that is still in a way smaller problem to address then having $10,000 credit card bill outstanding to address.
Some say that not all that is bad, that there's good debt and bad debt. How do you know the difference
something is that that's that you take on can help generate income or build human capital. I take a loan when I graduate. I more or I take a loan, invest in a property that can generate rental income. We still have to be careful mindful about how much that to take. No doubt there is potential but I still have to think of am I able to service? I think that is still a very important question to answer. Before we apply for a loan. There are things to consider to make it simple. We
call it P A. O. P. Stand for purpose. So what is the purpose of taking on this loan? Do I really need to buy that? And must I really by now assuming it is a mass for example I am a freelancer and my work requires me to have a computer and my computer broke down. Of course computer is my tool of trade so I need to buy at least I know why I'm taking on installment to purchase the computer Then the second question. Power right. A is affordability. So the question is how much can I afford to service
the money installment for this computer? So I need to stop take what is by cash flow, what is by earning assuming my capacity to service the installment payment is maybe $150 per month. That is my capacity to service then if my computer is going to cost $150 money installment to pay over the next 12 months then. Okay, not too bad. So don't go and buy a $4,000 computer right, because that will be beyond my servicing capacity already unless I can find a way
to reduce my other expenses then all is option. Now the question is, are there other options to taking up a new loan? For example, let's say a father promised the sun if you do well in the exams, I'm going to let you have a dog. The father also promised the mother the wife we go holiday, you know because now I can travel but the amount he has may not be able to go for holiday and still buy a dog. As you know. Nowadays, the
dog easily cost 8000 to $10,000 easily. And the holiday for a family of three will easily cost another few thousands. So he does have some savings but he can accommodate both. So what are the options here? Do not break his promise? The sun really has got good results. So instead of going by a puppy perhaps go to S. P. C. A. To adopt a dog. Right. I mean these are options. The sun still get a dog. Father kept his promise and still can bring the family for a trip. Ask yourself what is your power?
I'm just curious. You work with people with debt problems all the time. How do you handle your debt to use credit cards? Okay.
I do use credit cards nowadays quite a bit because nowadays a lot of things is tapped to pay and go. And the good thing is that there is a record on what I spent on. Right. But I make it a point to pay off at the end of the month let's say pay off. I mean the total outstanding, not what the statement asked me to pay minimum payment. So I get to have the convenience of using the card to make purchases and some cuts of course allow me to earn some cash back and things like that. But I don't
have to worry about talking up. That's because I paid off. Yes,
thank you so much for sharing your insights wavin. I mean it's a lot to think about and you make great points about how people with debt problems can come from all walks of life. And debt becomes an issue when you're borrowing more and more and you have to borrow to pay debt and to pay for your living expenses. And we have to remember not to make too many commitments at once. Thank you. Thanks to my guest Tan wei min. If you enjoyed our podcast give us a five star rating and review.
You can also email us at C. N. A. Podcasts at Mediacorp dot com dot S. G. The team behind this episode is Jacqueline, chan, Joanne, chan daniel lee and Christina robert. Until next time. This is Sarah coffee