Credit cards are extremely useful financial tools that can be helpful during emergencies. However, there can be long-term consequences that will affect your life and financial stability if it’s mismanaged. Working out of the shackles of credit card is no easy task and it will take a good amount of time and dedication. It is an arduous process, but certainly not impossible to achieve. If you feel you have reached a point with your finances where you are unable to manage, then it wise to seek professional help. In this case, credit counselling is highly recommended.
Credit counselling is also defined as the act of engaging a third party to discuss and negotiate with the bank on your debt repayment plan. We understand that it can be challenging to balance essential expenses and debt repayment on a tight budget. And if it’s not planned and managed carefully, there’s a high chance of landing yourself further into debt. Therefore, asking for help to manage your cash flow and debt repayments can bring you more good than harm.
Agensi Kounseling dan Pengurusan Kredit or Credit Counselling and Debt Management Agency (AKPK) was founded by Bank Negara Malaysia to help Malaysian citizens manage their debts. The creation of AKPK is in line with Bank Negara’s 10-year Financial Sector Master Plan which plays a part in the Consumer Protection Framework. AKPK offers financial education, financial counselling and a debt management programme for free to Malaysians.
The agency’s main objective and purpose is to encourage Malaysians to be more financially educated and responsible. Currently, the demographic of Malaysians who are saddled most in debt are adults aged between 30-50 years old. And predominantly, their debt stems from credit cards and personal loans.
At the moment, there are over 3.6 million credit cardholders in Malaysia. And from this number of users, more than RM37 billion of credit card debt has been accumulated. This is an alarming amount of personal debt. Debt management can be difficult for those who are knee deep in debt. But with professional help, consumers can work towards resolving their credit card debt and better financial health.
What is the root cause of credit card debt? It usually stems from the users’ lack of financial awareness, unhinged spending habits and failure to make full repayments on time. Once monthly repayments are missed or defaulted, then it will be a snowball effect that will end in the credit card user handling a large amount of debt with a high monthly repayment amount. AKPK is designed to help Malaysians who are in debt and there are three services being offered.
Prevention is better than cure, and this is true in the case of surmounting credit card debt. One of the branches of AKPK’s function is to educate young working adults and anyone else who is interested to be more financially educated. AKPK has seminars, workshops, roadshows and consumer education programs that are designed to impart financial planning and education knowledge to Malaysians who are keen to keep their finances in check and stay out of debt. This branch of AKPK is very important to the country’s economic development as more young citizens will be educated and equipped to handle their finances, thus reducing the potential of debtors in the future. AKPK also provides financial seminars to young couples who will be starting a family together, pinpointing on the importance of handling and managing finances as a family is important.
There has been a steady increase of Malaysians who have reached out to this agency for help over the years and AKPK has a good track record of helping those in debt to find a repayment scheme. The financial counselling session offered by the agency is done on a 1-1 basis so you will get personalized help where a AKPK representative will look into your income and expenditure. There, they will discuss cash flow and debt management and offer budgeting advice. You can refer to the AKPK website to check their counselling session schedules and make the effort to meet with someone to get the help you need.
If you think you need a debt management programme because you can no longer cope with any repayments then AKPK can assist with this as long as you are not declared bankrupt, not in litigation with banks and your personal debt needs to be less than RM2 million. Also, this debt management programme only covers credit card and personal loan debts so it excludes hire purchase loans and mortgages.
AKPK will basically do a detailed review of your income and expenditure and start a line of conversation and negotiation with the bank to reach an agreed amount for debt repayment. Once an agreement is made between both parties, a formal letter will be issued and you may start with the repayments. You will have to note that you will no longer be eligible to apply for any further credit from any banks till the debt is repaid in full and usually, debt management programmes take 8-10 years to complete, depending on your affordability and disposable income.
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