New unsecured credit rules take effect in 2015

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More borrowers are expected to seek financial counselling after new unsecured credit rules take effect next year, said Credit Counselling Singapore's president, Mr Kuo How Nam.

Under the new regulations, individuals exceeding the new limit of their annual income will have their total facilities frozen and be unable to borrow more unless they pay back any excess above the regulatory limit.

Credit Counselling Singapore added that the average debtors monthly disposable income is about S$3,000, while debtors would usually owe financial institutions about S$84,000, which represents 28 months of their disposable income.

The organisation, which provides counselling to financially distressed individuals, is beefing up its resources, and is in the process of putting in a new computer system as well as changing and streamlining its processes to increase productivity. It will also beef up manpower resources.

Changes to regulations regarding unsecured lending in Singapore were announced in September last year, while the limit to annual income for all unsecured outstanding loans take effect in June 2015.