What to Do When You Default on Your Credit Card

When you miss a credit card payment, it might seem like a small mistake. But if you continue to fall behind, things can snowball, leading to what’s known as credit card default. In Singapore, this isn’t just a financial issue — it can affect your credit score, borrowing ability, and even your legal standing. 

The good news? There are ways out. Whether you're struggling to keep up or already facing calls from collections, this guide breaks down what default really means, what options are available to you, and how you can start rebuilding your financial future.

Credit card default doesn’t happen overnight. It typically begins when a payment is missed, then snowballs if payments remain overdue for 90 days or more. At that point, the account is often handed over to a recovery department or collections agency.

Here’s how it usually escalates:

• Late payment: You’ll face a late fee and possibly a higher interest rate, but the account is still considered active.

• Delinquency: After 30 to 60 days of non-payment, the account is officially past due and your credit score may already take a hit.

• Default: After 90 days, the bank may send your account to internal recovery or an external collections agency. Your default status is reported to Credit Bureau Singapore (CBS), where it stays on file for several years.

Consequences can include repeated contact from debt collectors, formal legal letters, and even wage garnishment in extreme cases.

There’s no one-size-fits-all fix, but there are several paths you can consider depending on your situation.

Doing nothing

While it’s an option some choose, ignoring your debt will likely make things worse. Interest compounds, late fees grow, and eventually, you might receive a Letter of Demand or even a Writ of Summons. If things escalate, creditors may file for your bankruptcy or take legal action.

Even if you eventually settle the debt, banks may still flag you internally, making future borrowing more difficult.

Paying off your debt in full

If you're able, this is the cleanest way to close the chapter. Consider:

• Negotiating with your bank to reduce late fees or accrued interest.

• Exploring structured plans like a Debt Consolidation Plan, which rolls multiple debts into one fixed repayment over a few years.

Paying in full not only stops the calls — it also helps rebuild your credit profile over time.

Settling your debt

This involves negotiating to pay less than the full amount owed. It’s a middle-ground solution, often used when full repayment isn’t realistic. While this will still impact your credit history, it may stop further legal or collection actions. 

In Singapore, banks may only consider settlement offers after several months of non-payment. Always get any agreement in writing before making a payment.

Declaring bankruptcy

This is the final option for those with debts over S$15,000 and no feasible way to pay them off. In Singapore, bankruptcy is overseen by the Official Assignee (OA), and it comes with strict limitations:

• Overseas travel must be approved

• Employment and business restrictions may apply

• Bankruptcy remains on public record for five years after discharge

As an alternative, consider the Debt Repayment Scheme — a court-administered option for smaller debt amounts that allows structured repayment without full bankruptcy.

Defaulting on a credit card isn’t the end of the road — many Singaporeans have bounced back, and so can you. 

The key is to take small, consistent steps towards financial stability. Start by paying off any remaining debts on time to demonstrate reliability. Avoid applying for new credit until your finances are more stable, as this can help prevent falling into further debt. Make use of tools like budgeting apps or setting up GIRO payments to avoid missing future bills. It’s also wise to check your Credit Bureau report regularly to monitor your progress. 

Once you’re eligible again, secured credit cards can be a safe and structured way to rebuild trust with lenders and repair your credit history.

If you’ve defaulted, it’s best to reach out to your bank before things escalate further. Don’t wait for a call from the debt recovery team, as being proactive shows you’re serious about resolving the issue. 

Contact the bank directly and be honest about your financial situation. Prepare a realistic repayment proposal you can commit to, and be ready to negotiate. Stay calm and respectful throughout the process, and keep communication open. 

Banks are often more willing to work with customers who demonstrate a willingness to repay, even if it’s just a partial amount. Taking the first step can make a big difference.

Don’t go through this alone. There are resources to help:

• Credit Counselling Singapore (CCS)

• Ministry of Social and Family Development (MSF) – COMCARE

• Debt Consolidation Plans

• Debt Repayment Scheme (DRS)