How long before a credit card debt is written off in Singapore?

The Six-Year Clock: When Does Credit Card Debt Disappear in Singapore?

Credit card debt can feel like a crushing weight, especially when repayments become difficult to manage. Many Singaporeans naturally wonder: how long before a credit card company gives up trying to collect a debt? The answer lies within Singapore’s Limitation Act.

This Act sets a crucial six-year limitation period for pursuing debt claims. This means that after six years from the date of the last payment or acknowledgement of the debt, a creditor – in this case, the credit card company – generally loses the legal right to pursue you for that debt through the courts. This doesn’t automatically erase the debt, but it significantly limits the creditor’s options for recovery.

Understanding the Six-Year Countdown:

The six-year period doesn’t start from the moment you open the credit card account or the date of the first transaction. Instead, the clock begins ticking afresh from the date of your last payment or acknowledgment of the debt. This means even a small payment, or even an email acknowledging the outstanding balance, can reset the six-year limitation period.

For example:

• Scenario 1: You haven’t made any payments on your credit card debt for five years. The clock is ticking. However, if you make even a small payment in the sixth year, the limitation period resets, and you’ll have another six years until the debt is considered time-barred.
• Scenario 2: You haven’t made any payments but you sent an email to the credit card company inquiring about a possible debt settlement. This acknowledgment resets the clock.

What Happens After Six Years?

After the six-year period elapses without any payment or acknowledgment, the debt is considered time-barred under the Limitation Act. This doesn’t mean the debt disappears magically. The credit card company still technically holds the record of the debt. However, they can no longer pursue legal action to recover it through the courts. This significantly reduces their options for recovery.

Important Considerations:

• This only applies to legal action. While the credit card company can’t sue you, they might still attempt to contact you to encourage repayment. They may also continue reporting the outstanding debt to credit bureaus, which could potentially impact your credit score.
• Specific Circumstances: The Limitation Act is complex, and there might be exceptions depending on the specifics of your situation. For instance, fraudulent activities related to the debt could affect the limitation period.
• Professional Advice: If you’re struggling with credit card debt, seeking advice from a financial advisor or debt counsellor is crucial. They can help navigate your options and potentially develop a repayment plan that works for your circumstances.

In conclusion, while Singapore’s Limitation Act provides a six-year window after the last payment or acknowledgement of the debt, it’s crucial to understand the intricacies involved. The debt may be time-barred legally, but proactive management and seeking professional guidance are essential for handling credit card debt effectively and protecting your financial well-being. Don’t rely solely on the limitation period to resolve your debt; take proactive steps to manage your finances.