24-11-2023 (SINGAPORE) A surge in Singaporeans seeking help for mounting debts has prompted concern among financial counsellors, with younger individuals increasingly grappling with financial challenges. The rise is attributed to the economic impact of the pandemic, leading to job losses, reduced incomes, and inadequate savings. The trend has seen individuals borrowing more, including resorting to loan sharks, to manage their expenses and debts.
Financial counsellors note that the pandemic-induced financial strain, coupled with a lack of savings, has pushed individuals to borrow recklessly. The situation spirals when late fees and additional interest accrue, leading to a cycle of borrowing to service existing debt.
Arise2care Community Service, an organisation assisting debtors and those with gambling problems, reported a 50% increase in help-seekers over the past two years. Furthermore, one in three cases had exhausted all avenues for legal borrowing, forcing some to turn to loan sharks.
Younger debtors are increasingly prevalent, with those in their 30s and 40s forming a significant portion of individuals seeking help. Financial counsellors highlight that family commitments, such as the birth of a child, contribute to bad debt. Moreover, younger individuals are borrowing for riskier purposes, such as investments and gaming addiction.
Social services agencies, acting as intermediaries between debtors and legal creditors, negotiate repayment plans and provide counselling. The increase in the availability of buy now, pay later services has also contributed to the rise in debt among the youth, making it easier for them to access unsecured loans.
Financial counsellors stress the need for enhanced financial education tailored to the younger demographic to prevent over-leverage and promote responsible financial habits. While some guidelines are in place for service providers, agencies emphasize the importance of speaking out and seeking help early to facilitate a faster resolution of debt-related challenges.
