Only 1,000 of 84,000 “huge debts” seek help

According to the Straits Times news report “Few seeking help from new scheme to clear huge debts” (May 21) – “One borrower, who wanted to be known only as David, said he did not find the RAS helpful as the interest rate applies only for unsecured debts in excess of 12 times his monthly income.

“That means I would still have to find a way to pay for my credit card debt up to 12 times my monthly income… I don’t think I can commit to a fixed monthly payment for RAS over eight years. I would need the cash to roll for other debts. I believe I will be able to clear my debt in less than eight years,” said the 35-year-old.”


Lower % on excess of 12 months’ income debt only

When this scheme was announced – why was there no mention of this crucial information that the lower interest only applies to the amount owed in excess of 12 times income?

For example, if you owe 13 months – you only get the lower interest on one month of your debt.

Even before this scheme, one could seek help to restructure the entire debt into a debt repayment scheme to pay by instalments with lower interest on the entire debt.


Financial stress

If you lose your job or had a substantial pay cut – you may easily have debts that exceed 12 months of your income.

Such cash-strapped families may be surviving on credit for their living expenses, mortgage payments, educational expenses, existing debts, etc, and rolling over their debts from one financial institution to another to try to keep the interest rate lower.

This new policy of suspending the credit facilities of those affected may cause extreme financial stress to the “84,000 people with unsecured loans of more than 12 times their monthly income, with debts totalling $7.5 billion”.

They may end up borrowing from licensed or illegal moneylenders.


Only 0.5% of “huge debts” debtors approved?  

As to “of the 1,000 applications for what is called the Repayment Assistance Scheme (RAS), close to 400 have been approved since it was started by the Association of Banks in Singapore (ABS) last month.

This is a far cry from the estimated 32,000 people considered overextended – having unsecured debt of over 24 times the monthly pay – as of February” – why is it that only about 0.5 per cent (400 out of 84,000) have been approved under this help scheme?


Must have “good payment record” to help you?

Is this very low rate due partly to “applicants also need a good payment record with financial institutions”?

How likely is it that people with huge debts have “a good payment record with financial institutions”?


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