The DRS, also known as the Debt Repayment Scheme, is often considered one of the more viable ways to become debt-free.
In fact, it is fast becoming a popular option for many debtors to avoid bankruptcy. According to statistics by the Ministry of Law, the number of in-progress and completed debt repayment scheme cases has consistently risen which means more people are utilizing it to regain financial freedom.
If you are currently struggling with repaying your debts, here is how a debt repayment scheme can help you avoid going bankrupt. Read on to find out more.
What is a Debt Repayment Scheme?
There are several ways to settle your debt in Singapore and taking up the debt repayment scheme is one of them. When you are placed under the scheme, no creditors will be able to take further legal action against you and all your debts will stop accruing interest immediately.
Frequently seen as a final lifeline for many debtors to avoid bankruptcy, the debt repayment scheme allows you to repay your debts within a set timeframe with no additional interest levied, resulting in a win-win situation for both parties.
The main aim is to help debtors avoid penalties and the social stigma and restrictions associated with bankruptcy.
Of course, there are a few criteria you will have to fulfill before you can take up a debt repayment scheme:
- Total debt and liabilities must be at least $15,000 and not exceeding $150,000
- You must be employed and earning a regular income
- You are not an undischarged bankrupt
- You have not been placed under a Debt Repayment Scheme in the last 5 years
- You have not entered into a voluntary arrangement with your creditors in the last 5 years
- You are not a sole proprietor or partner of any firm
Debtors under the Debt Repayment Scheme also are not placed under certain restrictions that bankrupts have to adhere to. Here are some of the other benefits:
- No travel restrictions
- Ability to maintain a regular bank account
- Debts stop accruing interest
- Monthly repayment to one channel
- Shorter period to becoming debt-free
How to Get Started to Avoid Bankruptcy
Consider approaching a debt consultancy in Singapore that has experience in advising debtors on the next steps to take to become debt-free.
Here at Debt Aid, our consultants are well-versed in the various options available, including the Debt Repayment Scheme. We have helped hundreds of people regain financial freedom with our expertise.
One of our clients, Mr. Hoh, came to us six months ago seeking guidance on how to repay his debts. As the sole breadwinner with a monthly income of $5,700, he was experiencing difficulty repaying his debt of $122,000 owed to various creditors. Having to fork out $3,900 per month for repayments, which is more than half of his income, was simply too much for him to handle. After embarking on the Debt Repayment Scheme, Mr. Hoh is now servicing $1,300 of monthly repayments and successfully avoided being bankrupt.
Wondering if the Debt Repayment Scheme is right for you? Speak to our consultants today at a no-obligation consultation.