24-12-2012, 07:28 AM
Methinks there are now more cases like these, which is why MAS started to think about clamping down. Note the words in BOLD.
The Straits Times
www.straitstimes.com
Published on Dec 24, 2012
MAS proposals could help prevent debt cases like these...
By magdalen ng and yasmine yahya
EVEN while trying to pay off her credit card debt of $150,000, she would still get calls from telemarketers asking her if she would like to apply for more credit cards.
"It's crazy," said the 50-year-old saleswoman, who declined to be named as she does not want her colleagues to know about her financial situation.
"Obviously the banks are not doing their due diligence. These were the same banks that I owed money to."
She strongly believes that the rule changes proposed by the Monetary Authority of Singapore (MAS) last Friday will help many consumers, especially those in the younger generation.
These proposals, aimed at lowering debt delinquency and discouraging consumers from overspending, call on banks here to conduct due diligence on the creditworthiness of a potential customer before issuing a credit card or charge card or granting a credit line to him.
If, for example, a consumer has not paid his debt with a bank for more than 60 days, the MAS suggested that other banks should not be allowed to issue new credit cards or unsecured loans to him until he pays off that initial debt.
"These days, it seems like money is so easy to come by. You just sign, and people are buying houses without realising that the interest rates can spike," the saleswoman said.
"When the crunch comes and you can't pay, you are going to be a dead duck. I wish such measures were put in place years ago."
The crunch for her came during the Asian financial crisis of 1997, when she lost her banking job and, as a result, had to service her mortgage by charging it to her 10 credit cards.
Eventually, the debt rolled and snowballed to $150,000. She approached Credit Counselling Singapore (CCS) in the early 2000s, which helped her organise her debt and come up with a structured repayment plan.
"CCS helped me to negotiate with all the banks, not to cancel the debt but to reduce the interest," she added. She paid off her debt in full a few months ago, after seven years.
Similarly, debt became a major problem for 30-year-old Mr Chua - who also asked not to be named - after he was retrenched from a well-paying sales job.
"I was quite a high-income earner, with an average monthly salary of about $10,000, so my credit limit was $40,000," he recalled.
Although he did not splurge on luxury goods or big-ticket items, he did not control his spending, he said. When he got married, for example, he spent a lot of money on a lavish wedding.
Mr Chua was also supporting his parents and, later, his wife.
Then, about two years ago, he was retrenched. He found another job, but it did not pay as much. Yet he still had to continue supporting his family.
"Most of my expenses were just basic necessities like groceries. But during months when I earned a low commission, I had to use my credit card to pay for these things," he said.
"I would usually pay off just the minimum sum on my credit card bill. If I earned a higher commission that month, then I would pay a bit more. But still, it wasn't enough and my debt kept growing."
When his debt ballooned to $40,000, he sought help from CCS.
"I realised it was affecting my whole family's quality of life, because the banks kept sending lawyers' letters and writs of summons. I realised this could not go on," he said.
CCS has helped Mr Chua negotiate with the banks for lower interest rates on his debt, and has helped him draw up a repayment plan. It will likely take three to four years for him to become debt-free.
"It's good that the Government is doing something to help prevent such things," he said.
"At the end of the day, the banks should be more responsible about how they evaluate the customer.
"Do they really need to give you a credit limit that is four times your income? I don't think most people would be able to repay that amount."
The Straits Times
www.straitstimes.com
Published on Dec 24, 2012
MAS proposals could help prevent debt cases like these...
By magdalen ng and yasmine yahya
EVEN while trying to pay off her credit card debt of $150,000, she would still get calls from telemarketers asking her if she would like to apply for more credit cards.
"It's crazy," said the 50-year-old saleswoman, who declined to be named as she does not want her colleagues to know about her financial situation.
"Obviously the banks are not doing their due diligence. These were the same banks that I owed money to."
She strongly believes that the rule changes proposed by the Monetary Authority of Singapore (MAS) last Friday will help many consumers, especially those in the younger generation.
These proposals, aimed at lowering debt delinquency and discouraging consumers from overspending, call on banks here to conduct due diligence on the creditworthiness of a potential customer before issuing a credit card or charge card or granting a credit line to him.
If, for example, a consumer has not paid his debt with a bank for more than 60 days, the MAS suggested that other banks should not be allowed to issue new credit cards or unsecured loans to him until he pays off that initial debt.
"These days, it seems like money is so easy to come by. You just sign, and people are buying houses without realising that the interest rates can spike," the saleswoman said.
"When the crunch comes and you can't pay, you are going to be a dead duck. I wish such measures were put in place years ago."
The crunch for her came during the Asian financial crisis of 1997, when she lost her banking job and, as a result, had to service her mortgage by charging it to her 10 credit cards.
Eventually, the debt rolled and snowballed to $150,000. She approached Credit Counselling Singapore (CCS) in the early 2000s, which helped her organise her debt and come up with a structured repayment plan.
"CCS helped me to negotiate with all the banks, not to cancel the debt but to reduce the interest," she added. She paid off her debt in full a few months ago, after seven years.
Similarly, debt became a major problem for 30-year-old Mr Chua - who also asked not to be named - after he was retrenched from a well-paying sales job.
"I was quite a high-income earner, with an average monthly salary of about $10,000, so my credit limit was $40,000," he recalled.
Although he did not splurge on luxury goods or big-ticket items, he did not control his spending, he said. When he got married, for example, he spent a lot of money on a lavish wedding.
Mr Chua was also supporting his parents and, later, his wife.
Then, about two years ago, he was retrenched. He found another job, but it did not pay as much. Yet he still had to continue supporting his family.
"Most of my expenses were just basic necessities like groceries. But during months when I earned a low commission, I had to use my credit card to pay for these things," he said.
"I would usually pay off just the minimum sum on my credit card bill. If I earned a higher commission that month, then I would pay a bit more. But still, it wasn't enough and my debt kept growing."
When his debt ballooned to $40,000, he sought help from CCS.
"I realised it was affecting my whole family's quality of life, because the banks kept sending lawyers' letters and writs of summons. I realised this could not go on," he said.
CCS has helped Mr Chua negotiate with the banks for lower interest rates on his debt, and has helped him draw up a repayment plan. It will likely take three to four years for him to become debt-free.
"It's good that the Government is doing something to help prevent such things," he said.
"At the end of the day, the banks should be more responsible about how they evaluate the customer.
"Do they really need to give you a credit limit that is four times your income? I don't think most people would be able to repay that amount."
