Struggling with debt? You aren’t alone: an average of 4,000 Singaporeans every month hit unsecured debt levels 12 times their monthly income or more last year.

If you’ve been searching for debt management solutions, you may have come across a scheme called Debt Consolidation Plan (DCP), whereby your existing debts are consolidated into a single loan. However, the misconceptions surrounding DCPs are numerous, and may dissuade you from considering what could be an effective tool for managing your debts. Here are the top misconceptions:

  1. Debt consolidation is the same as bankruptcy

One of the biggest misconceptions about DCPs is that they are the same as bankruptcy, or that it is only for those in dire financial straits.

This is not true at all. Bankruptcy is a legal status of someone who cannot repay debts in excess of S$15,000 and has been declared bankrupt by the Court. If …