Debt Management, Restructuring, Consolidation Schemes: What’s the difference?


If you are confused by the various debt assistance schemes – you may not be alone?

Someone asked me what’s the difference  between the Debt Management Plan, Debt Restructuring Scheme and the  Debt Consolidation Plan?

Let me try to explain briefly in layman’s terms.

If you have unsecured  debts like credit cards, credit lines – you can go to one of the regular briefings done by Credit Counselling Singapore.

They can then try to help you to negotiate a consolidated instalment repayment plan – (much lower interest  than the typical 25 per cent per annum on credit cards) – with all the banks that you owe money to, under a Debt Management Plan.

If you are sued for bankruptcy and your debts  are not over $100,000 – you may normally be eligible for a Debt Restructuring Scheme through the Official Assignee, if you have a regular  job with a regular  income.

If you owe more than 18 months of your income, then wef  1 July – you will receive a letter informing you that you should apply with one of the participating banks under the Debt Assistance Scheme – to be considered for an instalment repayment plan (Debt Consolidation Plan) – and be given one month’s income credit card facility going forward.

In any case, if you continue to owe  more than 18 months income for more than three months – all your credit facilities will be suspended.

In all the above three schemes – it is unlikely that you will ever be able to get any loans or credit facilities for the rest of your life, except for a HDB housing loan from the HDB.

Leong Sze Hian


About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.