Speaker 1: This is a C. N. A. Podcast.
Speaker 1: Can
Speaker 2: you give us your quick thoughts on the following credit cards?
Speaker 1: This is not your money buy
Speaker 2: now pay later
Speaker 1: by only you have provided for it.
Speaker 2: YOLO spending.
Speaker 1: You live only once you do want to live in
Speaker 1: debt
Speaker 2: debt spiral.
Speaker 1: You want to climb up. You have to make the
Speaker 1: effort good
Speaker 2: debt versus bad debt.
Speaker 1: All debts, you must know that you can pay before
Speaker 1: you take on.
Speaker 2: Thank you.
Speaker 2: Thanks for joining us on money talks. I'm Sara al Khaldi.
Speaker 2: Have you seen something online that you simply had to
Speaker 2: have and bought it? Even if you didn't have the
Speaker 2: cash for it? That's where a range of credit comes
Speaker 2: in credit cards installment payments and by now
Speaker 2: now pay later schemes. There are so many options. If
Speaker 2: you really want to make that purchase. What we may
Speaker 2: not know is that it could come at a heavy
Speaker 2: cost in the end pushing back payments can become a
Speaker 2: pile of debt that can also get out of control.
Speaker 2: So what do a few late credit card payments turn
Speaker 2: into a serious problem? What can you do when you
Speaker 2: fall behind on your bills? And it's all debt really
Speaker 2: bad
Speaker 2: with us to talk all about. This is Tan Women
Speaker 2: of credit counseling Singapore. It's an independent nonprofit social service
Speaker 2: agency that provides financial counseling and debt management services. Thanks
Speaker 2: so much Raymond for joining us today and thanks giving
Speaker 2: us your time
Speaker 2: now. I'm sure you've heard all kinds of stories when
Speaker 2: it comes to debt problems, especially with the work that
Speaker 2: you do. What was the biggest debt issue that you've encountered,
Speaker 1: The debt size. Right. I think it was about two
Speaker 1: million unsecured borrowing. So it's a lot of money, mortgage
Speaker 1: and everything. It's about two million. And in fact
Speaker 1: We have a handful of people going $12 million dollars
Speaker 1: that we actually managed to work out repayment arrangement for them.
Speaker 1: It's a big commitment for them to pay of course,
Speaker 1: with the support of their families, not the families members
Speaker 1: helping them to pay, but the family members will take
Speaker 1: care of the household expenses so that the person can
Speaker 1: use his own earnings to make the repayment.
Speaker 1: Yes, they do $2 million dollars um sums related to gambling.
Speaker 1: As you know, once you touch on gambling, it's a
Speaker 1: lot of money and of course some of them, they
Speaker 1: say they lost in stock market, so they punch in
Speaker 1: that sense. So once you touch on this type of
Speaker 1: investment or gambling, that size is usually very huge. Generally
Speaker 1: speaking bigger than other people who are more like spending
Speaker 1: or do the job or due to other reasons?
Speaker 2: How often do you come across people with serious debt problems?
Speaker 2: And is there a certain type of person that would
Speaker 2: fall into this or do they come from all walks
Speaker 1: of life? All walks of life? Being in debt doesn't
Speaker 1: mean that the persons are not educated or not financially savvy.
Speaker 1: We see clients from people who do not have a
Speaker 1: lot of education
Speaker 1: to people who are university graduates and post grads. We
Speaker 1: see people who are earning not a lot of money.
Speaker 1: There were people who used to earn better income that
Speaker 1: qualify for credit cards and subsequently, because of employment issue
Speaker 1: and whatever other issue,
Speaker 1: Their income drops substantially. So when they came to us
Speaker 1: they may be earning less than $2,000 a month, but
Speaker 1: we also have people who earns five figures a month
Speaker 1: to come to see us. Yes, it's really all walks
Speaker 1: of life because the thing is getting to that is
Speaker 1: normally not due to just one reason. It's normally a
Speaker 1: few reasons
Speaker 1: it could be employment related meaning Picard when times is
Speaker 1: not good, just like covid time, people are asked to
Speaker 1: work three days week off for this week and your
Speaker 1: income will drop substantially, but commitments already made and it's
Speaker 1: good spending
Speaker 2: is already high or is
Speaker 1: already there. But it's more of the commitments spending, you
Speaker 1: can do something about it to a certain extent,
Speaker 1: but commitments, meaning that you already taken up a few
Speaker 1: loans that you need to service that we will have
Speaker 1: to continue to pay even during covid time. So if
Speaker 1: I have very high commitments, I will find very challenging
Speaker 1: if I have a pay cut. But this is of
Speaker 1: course job loss
Speaker 1: and if I do not really have a lot of
Speaker 1: savings that can see me through until I get my
Speaker 1: next job, that means people will rely on credit facilities
Speaker 1: to take care of their living expenses of course there
Speaker 1: are other reasons like overspending basically spending without planning and
Speaker 1: of course there are also some unfortunate reasons that could
Speaker 1: be due to a sudden medical bill that is really
Speaker 1: huge and perhaps there's no sufficient insurance coverage or no
Speaker 1: coverage at all. There are also other reasons like
Speaker 1: the person is really kind. So the friends of the
Speaker 1: family members come and ask him for a loan and
Speaker 1: then he doesn't have savings himself but he wants to help.
Speaker 1: So he take credit facilities to give up the loan
Speaker 1: or agreed to be a personal guarantor. Now the friend
Speaker 1: of the family members may not be a bad person
Speaker 1: who borrowed and didn't want to repay.
Speaker 1: But the problem is the person really got no way
Speaker 1: to repay you, but you are the person who took
Speaker 1: up the loan, You are the personal guarantor, the creditors
Speaker 1: will come after you because you are the one who
Speaker 1: borrow it
Speaker 2: here in Singapore. A lot of us have that mortgage
Speaker 2: payments for example, some have personal loans for renovations, weddings,
Speaker 2: credit cards are quite common. So when does that
Speaker 1: become a problem? Pretty much everyone borrows that become an
Speaker 1: issue is that the outstanding amount is increasing over time.
Speaker 1: That means I'm going more and more that is
Speaker 2: taking up more
Speaker 1: because I'm boring more and
Speaker 1: it will be a serious problem when I can't even
Speaker 1: service my debts or I'm actually borrowing to service my debts?
Speaker 1: That is really a problem. And if my creditors start
Speaker 1: calling me that is a serious problem,
Speaker 1: then of course the most serious one is when my
Speaker 1: creditors actually take legal actions against me because of me
Speaker 1: not making payment promptly or not making any payment at all.
Speaker 1: So there are different stages. But the red flag is
Speaker 1: when I look at my money statements, it keeps growing
Speaker 1: and I actually have to use credit to pay for
Speaker 1: my living expenses before my next paycheck. But of course
Speaker 1: I said, once the phone starts coming, that is definitely
Speaker 1: that
Speaker 2: you talked about the reasons why people find themselves in
Speaker 2: debt problems. Are there similarities among the people who have
Speaker 2: this problem? Because you mentioned they could come from all
Speaker 2: walks of life, they can have big paychecks from your
Speaker 2: experience or their similarity.
Speaker 1: I can say that they really have a similarity because
Speaker 1: it can be arranged in terms of their earning capacity
Speaker 1: in terms of their education level.
Speaker 1: But I would say the majority of them, 60, of them,
Speaker 1: there are more males than females really why the men
Speaker 1: tends to spend on big items, like maintaining a car. Yes.
Speaker 1: And maintaining current Singapore is really expensive
Speaker 2: increasingly now we are seeing buy now pay later schemes.
Speaker 2: On one hand, it helps people who are trying to
Speaker 2: make a big purchase without really burning a hole in
Speaker 2: their pocket. Interest free is what they
Speaker 2: call it as well. But has it led to overspending
Speaker 2: here in Singapore and how can we protect ourselves from
Speaker 2: spending too much?
Speaker 1: We don't really have data on this B. M. P. L.
Speaker 1: And my understanding buy now pay later at this juncture.
Speaker 1: I don't think there are many expensive items that you
Speaker 1: can really buy now. Pay later. That said
Speaker 1: even small amounts can become a problem. If I buy
Speaker 1: many things under B. M. P. L. It could add
Speaker 1: up to a substantial amount if I buy one item
Speaker 1: $300 to repay over three months, $100 per month. I
Speaker 1: can not a problem. Then I go and buy another
Speaker 1: item $600 spread over three months. So it's $200. I
Speaker 1: think I still can manage 200 but I forgot already
Speaker 1: committed 100 then now 200 it becomes 300.
Speaker 1: If I'm not very clear about my cash flow position
Speaker 1: and things like that. In reality maybe I can only
Speaker 1: commit up to 100, but now I got $300 to
Speaker 1: service and I continue to spend as per normal then
Speaker 1: I may find I may not have enough money. You
Speaker 1: know then the thing is that if I got savings,
Speaker 1: okay I used my savings to paper. If I don't
Speaker 1: have savings that I may actually find money too tight
Speaker 1: or money not enough.
Speaker 1: So making too many commitments at one shot during a
Speaker 1: short period of time it can become a problem. So
Speaker 1: it's not that you can't buy things. It's just that
Speaker 1: when you buy you need to know do you have
Speaker 1: the money to service it? If you buy it on
Speaker 1: installment payment? You
Speaker 2: talked about when debt is a problem? And the red
Speaker 2: flags that we have to watch out for? What point
Speaker 2: does it become out of control that you really need
Speaker 2: to go seek help
Speaker 1: if I really notice my outstanding keep going up and
Speaker 1: not down. I should be sitting down to take stock
Speaker 1: and see whether I need to stick up or not.
Speaker 1: If I receive a phone call from my creditors definitely
Speaker 1: value and do something about it or the fact that
Speaker 1: I need to apply for new credit facilities in order
Speaker 1: to take care of my expenses
Speaker 1: to make payment to my assisting credit facilities. That is
Speaker 1: definitely time to do something about it.
Speaker 2: What can they do?
Speaker 1: Of course they can come forward to credit counseling. Singapore
Speaker 1: for assistance. We hold a weekly talk on how to
Speaker 1: manage a debt problem. Every week we have an english
Speaker 1: version
Speaker 1: either once to twice a month. We have a chinese
Speaker 1: version is free of charge. Go to our website www
Speaker 1: dot c C S dot org dot S G. We
Speaker 1: will talk about the dues and the don's. We'll talk
Speaker 1: about what are the options available to address the debt
Speaker 1: problem. We also talk about if I can't service my debts.
Speaker 1: What possible collection actions I may face. But assuming after
Speaker 1: attended to talk, you are still confused or you would
Speaker 1: like to speak to someone just to get a new
Speaker 1: treated party opinion. You are most welcome to fill up
Speaker 1: the counseling request package so you can have a private
Speaker 1: session with our credit counselor.
Speaker 1: And the credit counselor will help you to stop take
Speaker 1: and work with the borrower to draw up a monthly
Speaker 1: living expense budget and help them to work out a
Speaker 1: repayment arrangement to their creditors. We will then drop a
Speaker 1: proposal to submit to his creditors on his behalf
Speaker 1: and then the creditors will then decide whether they are
Speaker 1: prepared to accept what he proposed if the creditors except
Speaker 1: what he proposed then now the ball is in his court.
Speaker 1: He just need to make payment according to what he
Speaker 1: has proposed and as long as you make the payment
Speaker 1: in full on time every month,
Speaker 1: he can see himself become debt free a few years
Speaker 1: down the road. But at the
Speaker 2: end of it, you still
Speaker 1: need to pay the debt. Of course people who chose
Speaker 1: not to pay their debts. They will have to face
Speaker 1: consequences meaning facing legal actions that includes being made a bankrupt.
Speaker 1: Hi, I'm Adrian Tan and I'm Christina robert. We are
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Speaker 2: some people might think, oh I have a debt problem,
Speaker 2: let me just file for bankruptcy. What are the implications?
Speaker 1: Okay, I think bankruptcy should be seen as the last
Speaker 1: resort to manage the debt problem. If a person have
Speaker 1: a debt problem, I would strongly suggest that the person
Speaker 1: find alternative solutions If all solutions has been explored and
Speaker 1: didn't work, of course the person may want to consider bankruptcy.
Speaker 1: Other solutions include talking to your creditors directly. Some creditors
Speaker 1: may offer you their own in house debt relief plan.
Speaker 1: If that helps, then there's no need to go for bankruptcy.
Speaker 1: But assuming you can't work things out with all your
Speaker 1: creditors and you have nothing that you can sell to
Speaker 1: raise funds. Of course you can come forward to credit
Speaker 1: counseling Singapore if you are suitable and you want it,
Speaker 1: we can put up a debt management program. But assuming
Speaker 1: the person can't even worked out a debt management program
Speaker 1: to us and no other ways then of course bankruptcy
Speaker 1: is a solution, bankruptcy record is publicly searchable. So if
Speaker 1: you do not want to have record, do not take
Speaker 1: it lightly.
Speaker 1: It doesn't mean that I don't have to pay my debts,
Speaker 1: I still have to pay. It's just that because I'm
Speaker 1: not able to pay under the standard terms and conditions,
Speaker 1: I will be probably asked to pay a fraction of
Speaker 1: it as a bankrupt. I do have to be mindful.
Speaker 1: For example, I can't travel without first getting permission and
Speaker 1: for some people depending on their professions, it could become
Speaker 1: a hindrance ba
Speaker 1: because I may not get my license renewed if I
Speaker 1: am a bankrupt. So they're our responsibility expected of a
Speaker 1: bankrupt on top of making the money contribution and target contribution.
Speaker 1: In order for me to get this charge with record removed.
Speaker 2: What's the worst that can happen if you try to
Speaker 2: just escape your debt or not handle it as you
Speaker 1: should. Of course you're dead size will get bigger
Speaker 1: to the extent that the creditors probably will also take
Speaker 1: legal action against the person which could be rich or
Speaker 1: seizure and sale someone will go to the house of
Speaker 1: the borrower place. Tickles on the items that have been seized.
Speaker 1: Of course you cannot remove those items because it's been
Speaker 1: seized right. If no payment arrangement is being made monday,
Speaker 1: the Ganga ni men secondhand goods buyers will go to
Speaker 1: the house together with the Bay leaf the auction to
Speaker 1: sell away the items. Yeah, they have the right to
Speaker 1: sell away. It could be very traumatizing because this is
Speaker 1: done at the home. Yeah. If you've got neighbors, it's
Speaker 1: possible that your neighbors be seed. If you do not
Speaker 1: want to face that type of situation
Speaker 1: then I think the person should try to make arrangements
Speaker 1: to repay the creditors so that the credits will take
Speaker 1: this action. The other possible action is to sue the
Speaker 1: person bankrupt for people who are bankrupted. We have launched
Speaker 1: a new service, a support programs for the bankrupt and
Speaker 1: their families. It is what we call the bankruptcy rehabilitation program.
Speaker 1: We will help them to draw up a money budget
Speaker 1: that helped them to meet their money contribution and target
Speaker 1: contribution
Speaker 1: so that if they meet their M. C. T. C.
Speaker 1: They can see themselves getting discharged and having their record
Speaker 1: removed from publicly searchable records. People with a money issue
Speaker 1: whether bankrupt or not. They have a lot of stress
Speaker 1: especially the bankrupt newly bankrupted individuals. There's probably a lot
Speaker 1: of emotional turmoil and relationship issues. So we have talks
Speaker 1: that teach people how to better manage their relationship problem,
Speaker 1: their mental stress and psychological stress. And we have a
Speaker 1: unit
Speaker 1: they can talk to the bankrupts and the backups family
Speaker 1: to ascertain what are their other needs so that we
Speaker 1: can do referral for them to seek help from other
Speaker 1: agencies and
Speaker 2: then they can get out of it too. That's the
Speaker 1: hope and get out of it and get the bankruptcy
Speaker 1: record remove from publicly searchable records.
Speaker 2: What if it's your friend or your family member that's
Speaker 2: in a debt problem, maybe not you, but what can
Speaker 2: you do to help other people? Sometimes they realize the situation.
Speaker 2: Sometimes they don't.
Speaker 1: If you know of a friend who actually in debt
Speaker 1: but he is in denial, which often times that's what happened.
Speaker 1: I have family members calling us. Can you please help
Speaker 1: my so and so
Speaker 1: we say that we can't help him unless you want
Speaker 1: to be helped you because the debt is under his name.
Speaker 1: No one can do anything. Of course you can help
Speaker 1: him to pay. But we all know it's not helping
Speaker 1: because once you help him to pay, chances are again,
Speaker 1: based on our experience is that people who get into
Speaker 1: debt again because their families help them to pay. Right.
Speaker 1: And sometimes the family members is actually in no financial
Speaker 1: position to help. So the family members go and borrow
Speaker 1: that is even worse. So now there's not just one
Speaker 1: person in that, but
Speaker 1: two persons are in debt. Even if the family members
Speaker 1: has got financial capacity to help during speaking the person
Speaker 1: in that many times, they don't learn from this experience.
Speaker 1: Very likely they will get into trouble again. So there's
Speaker 1: no end to it. Of course you can talk to
Speaker 1: the person make some agreements. It's not going to be easy.
Speaker 1: I can imagine it must be really tough because first
Speaker 1: of all,
Speaker 1: the doctor is in denial. The person can get angry
Speaker 1: and not cooperative. So being a friend of being a
Speaker 1: family member really have to be very patient
Speaker 2: if you're someone who's vulnerable or easily tempted to borrow
Speaker 2: or use credit cards and take up loans. Is the
Speaker 2: solution just using cash and not taking up
Speaker 2: any that as much as possible?
Speaker 1: Yes, I would say so. If the person is really
Speaker 1: very what they call impulsive, compulsive to make purchases frankly speaking,
Speaker 1: I don't have any credit cards because if you don't
Speaker 1: have the cuts with you, you can buy things that
Speaker 1: you don't have cash to purchase. And the worst scenario
Speaker 1: is that you use up your savings because you still
Speaker 1: have your debit card, right?
Speaker 1: But at least you don't have a credit issue. Of course,
Speaker 1: you still have to find a way to see how
Speaker 1: to leave the balance day until you get your next paycheck.
Speaker 1: But I think that is still in a way smaller
Speaker 1: problem to address then having $10,000 credit card bill outstanding
Speaker 1: to address.
Speaker 2: Some say that not all that is bad, that there's
Speaker 2: good debt and bad debt. How do you know the
Speaker 2: difference
Speaker 1: something is that that's
Speaker 1: that you take on can help generate income or build
Speaker 1: human capital. I take a loan when I graduate. I
Speaker 1: more or I take a loan, invest in a property
Speaker 1: that can generate rental income. We still have to be
Speaker 1: careful mindful about how much that to take. No doubt
Speaker 1: there is potential but I still have to think of
Speaker 1: am I able to service? I think that is still
Speaker 1: a very important question to answer. Before we apply for
Speaker 1: a loan.
Speaker 1: There are things to consider to make it simple. We
Speaker 1: call it P A. O. P. Stand for purpose. So
Speaker 1: what is the purpose of taking on this loan? Do
Speaker 1: I really need to buy that? And must I really
Speaker 1: by now assuming it is a mass for example I
Speaker 1: am a freelancer and my work requires me to have
Speaker 1: a computer and my computer broke down. Of course computer
Speaker 1: is my tool of trade so I need to buy
Speaker 1: at least I know why I'm taking on installment to
Speaker 1: purchase the computer
Speaker 1: Then the second question. Power right. A is affordability. So
Speaker 1: the question is how much can I afford to service
Speaker 1: the money installment for this computer? So I need to
Speaker 1: stop take what is by cash flow, what is by
Speaker 1: earning assuming my capacity to service the installment payment is
Speaker 1: maybe $150 per month.
Speaker 1: That is my capacity to service then if my computer
Speaker 1: is going to cost $150 money installment to pay over
Speaker 1: the next 12 months then. Okay, not too bad. So
Speaker 1: don't go and buy a $4,000 computer right, because that
Speaker 1: will be beyond my servicing capacity already unless I can
Speaker 1: find a way
Speaker 1: to reduce my other expenses then all is option. Now
Speaker 1: the question is, are there other options to taking up
Speaker 1: a new loan? For example, let's say a father promised
Speaker 1: the sun if you do well in the exams, I'm
Speaker 1: going to let you have a dog.
Speaker 1: The father also promised the mother the wife we go holiday,
Speaker 1: you know because now I can travel but the amount
Speaker 1: he has may not be able to go for holiday
Speaker 1: and still buy a dog. As you know. Nowadays, the
Speaker 1: dog easily cost 8000 to $10,000 easily. And the holiday
Speaker 1: for a family of three will easily cost another few thousands.
Speaker 1: So he does have some savings but he can
Speaker 1: accommodate both. So what are the options here? Do not
Speaker 1: break his promise? The sun really has got good results.
Speaker 1: So instead of going by a puppy perhaps go to S. P. C. A.
Speaker 1: To adopt a dog. Right. I mean these are options.
Speaker 1: The sun still get a dog. Father kept his promise
Speaker 1: and still can bring the family for a trip. Ask
Speaker 1: yourself what is your power?
Speaker 2: I'm just curious. You work with people with debt problems
Speaker 2: all the time.
Speaker 2: How do you handle your debt to use credit cards? Okay.
Speaker 1: I do use credit cards nowadays quite a bit because
Speaker 1: nowadays a lot of things is tapped to pay and go.
Speaker 1: And the good thing is that there is a record
Speaker 1: on what I spent on. Right. But I make it
Speaker 1: a point to pay off at the end of the
Speaker 1: month let's say pay off. I mean the total outstanding,
Speaker 1: not what the statement asked me to pay minimum payment.
Speaker 1: So I get
Speaker 1: to have the convenience of using the card to make
Speaker 1: purchases and some cuts of course allow me to earn
Speaker 1: some cash back and things like that. But I don't
Speaker 1: have to worry about talking up. That's because I paid off. Yes,
Speaker 2: thank you so much for sharing your insights wavin. I
Speaker 2: mean it's a lot to think about and you make
Speaker 2: great points about
Speaker 2: how people with debt problems can come from all walks
Speaker 2: of life. And debt becomes an issue when you're borrowing
Speaker 2: more and more and you have to borrow to pay
Speaker 2: debt and to pay for your living expenses. And we
Speaker 2: have to remember not to make too many commitments at once.
Speaker 2: Thank you.
Speaker 2: Thanks to my guest Tan wei min. If you enjoyed
Speaker 2: our podcast give us a five star rating and review.
Speaker 2: You can also email us at C. N. A. Podcasts
Speaker 2: at Mediacorp dot com dot S. G. The team behind
Speaker 2: this episode is Jacqueline, chan, Joanne, chan daniel lee and
Speaker 2: Christina robert. Until next time. This is Sarah coffee