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​Debt collection and your options
pay off debt

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When you have an unpaid debt, the bank will take action to collect what's owed to them. Learn about the creditor's collection process and your options.

Key takeaways
  • If you have trouble paying up, own up. The sooner you do it, the better.
  • Options are available to help you settle your debt.
  • Seek credit counselling for debt management if you need to.

What is the debt collection process?

If you're unable to pay your debt to the bank, they may start the debt collection process. This process can stop as soon as you settle your debt and before the issue escalates.

If not, the bank can take the following actions:

Action What happens
Reminder letter and call First stage of debt collection. The bank asks for payment and finds out your plans for repayment.
Formal letter A letter of demand stating the bank's intention to take legal action if you fail to pay the outstanding debt, usually 7 days from the date of the letter.
Legal notice of demand Lawyers representing the bank will ask for repayment within 7 days with this legal document.
Writ of summons The writ, issued by a court of law, requires you to attend court on a certain date to answer the bank’s claim for payment.
If the court finds that you owe the amount claimed, your debt becomes a judgment debt. The bank can now take legal measures to get you to pay up, including starting bankruptcy proceedings.


Your CPF savings are protected from creditors and the Official Assignee, regardless of how much you may have been sued for. You will still be able to apply for the withdrawal of your CPF savings as an undischarged bankrupt when you turn 55.

What are your options?

Answer your bank's phone calls. Be honest. Tell them you're having trouble with your repayments and try to work out a solution with them.

Here are some possible options:

Settle the debt with a lump sum payment

If you are able to raise enough funds to settle the debt, you might be able to negotiate with your bank for a discount.

Avenues for raising funds include:

  • Selling assets
  • Borrowing from cheaper sources such as relatives or friends
  • Taking a loan from your insurance cash value. Note: Your coverage will reduce or lapse if you are unable to pay back this loan to your policy. You will also have to pay high interest rates on the loan.

Appeal for lower instalments

Appeal to your bank directly to restructure your loan. This could be in the form of smaller instalments over a longer period.

Get credit counselling

Contact Credit Counselling Singapore (CCS) to find out if you qualify for Debt Management Programme (DMP). CCS may be able to assist you with debt management, credit counselling and where applicable, work out a debt repayment proposal for you.

If you are suitable for a DMP, a CCS counsellor will set up a monthly instalment repayment plan to settle all unsecured debt across the banks over 5 to 7 years.

Download a self-help pack and sign up for free talks on managing debts.

Apply for debt consolidation

Consider applying for the Debt Consolidation Plan (DCP), if you have unsecured debts exceeding 12 times your monthly income. Your debts across different financial institutions (FIs) will be consolidated with one of the participating FIs at a lower interest rate. You make a fixed monthly repayment sum until your debt is fully paid.

Apply for bankruptcy

Banks can sue, or you can declare bankruptcy for debts of $15,000 and above. A deposit of $1,850 is paid to the Official Assignee for taking care of and handling the bankrupt estate.

Bankruptcy is a last resort. It can affect your credit report and make it difficult for you to get loans in the future.

Last updated on 27 Jul 2021