That was when he called up the bank to negotiate for a plan to make smaller repayments. “I wanted to be a good debtor,” said the 48-year-old former salesman.

But today, Mr Lim feels his decision to pay off his $4,370 debt gradually, rather than file for bankruptcy (as he had other debts which totalled to $10,000), has left him worse off.

Over 33 months, he has repaid a total of $5,650, having been diligent in paying the minimum monthly repayments, Mr Lim said.

Yet, a bank statement he received in May showed that for all his efforts, he has serviced only $1,290 of the principle sum. He discovered only recently most of his instalments had gone into interest and late payments.

“This means I may have to spend more than five years paying back the bank, and pay them more than three times the original amount. This is not right,” Mr Lim told Weekend xtra. “What’s the point of negotiating for an instalment plan then?”

Mr Lim claims he did not know that the plan included a monthly late payment charge and did not spot this earlier as the bank does not send monthly paper statements.

Recently, the bank, a major foreign player, agreed to offset the paid-up interest and late payments against Mr Lim’s outstanding debt.

But it took many calls and appeals before Mr Lim managed to obtain some reprieve.

First, Mr Lim said, a junior officer brushed him off when he called the bank. A second one agreed to give a copy of all his monthly statements, but turned down his waiver request.

Mr Lim also called the Financial Industry Disputes Resolution Centre and the Association of Banks in Singapore for help. Both referred him back to the bank.

A door finally opened when his Member of Parliament wrote a letter on his behalf to the Monetary Authority of Singapore. Mr Lim was then directed to a senior banking officer.

The bank declined to comment, saying that Mr Lim’s case had been resolved.

Financial counsellors and lawyers say that even in the case of negotiated instalment plans, late charges may still be imposed because the original sum is already in arrears. These plans are usually crafted on a case-by-case basis, considering factors like debt size and how co-operative the debtor has been.

Industry experts say that the debtor can also request that his debt be structured into a term loan, where the high interest rates of roll-over credit is reduced. “Debtors should not avoid the bank. At first instance of a letter of demand, or prior to that when you foresee difficulty, talk to the bank,” said Mr Tan Keh Whoo, director at Advent Law Corporation.

A debtor can always appeal for a waiver when he has a good record of timely and full minimum payments to the bank.

Write a letter and include a table of your repayments to boost your case, said a Credit Counselling Singapore (CCS) Ms Tan Huey Min. Debtors should only opt for bankruptcy as the last resort, said Ms Tan. This is because filing for bankruptcy brings with it restrictions on travel and may affect a person’s professional development as some companies do not hire bankrupts. Esther Fung