We interviewed Desmond Chong, a Financial Education Trainer POWER! at Agensi Kaunseling dan Pengurusan Kredit (AKPK). He studied Master of Marketing at Universiti of Northumbia, Newcastle. Desmond now is working hand in hand with AKPK to promote financial education to Chinese community in Malaysia through ASTRO AEC (channel 301). He can be reached via his fb.
What is AKPK and how AKPK sustain itself since it offers free service?
Agensi Kaunseling dan Pengurusan Kredit (AKPK), a wholly owned subsidiary of Bank Negara Malaysia (BNM), was set up to proactively ensure the resilience of households by providing an avenue for individual borrowers and potential borrowers to seek advice and assistance in managing their finances and debts. AKPK offers, free of charge, the following services:
- Financial education – basic money management and tips on using credit responsibly and productively
- Counselling – advice on managing finances wisely and handle debts responsibly. Includes advice on budgeting, money management and current issues which are credit related.
- Debt Management Programme – A personalised repayment programme for individuals who are facing difficulties servicing their loans
Since AKPK is a non-profit organisation as well as a wholly owned subsidiary of BNM, we are fully funded by BNM to ensure that we are able to reach out to financially distressed individuals without charging a fee for our services.
Can communication with AKPK be done via online/email for people who can’t travel, sick or to embarrass to show up?
- We communicate through email for account information, application status and general enquiries.
- However, for financial counselling and to apply for the Debt Management Programme (DMP), individuals will have to visit any of our branches nationwide for a more comprehensive advice on managing their finances.
- Another reason that a face-to-face session is necessary is because the preparation of a customised budget for the individual requires our counsellors to take a close look at the individual’s state of financial affairs. This budget is prepared after analysing the individual’s bank statements as well as his/her CCRIS report. These documents are highly private and confidential, and thus, we prefer meeting customers in person.
1) What will be the signs that indicate a person requires AKPK help?
Some of the signs include:
- Having little to no savings to handle unexpected expenses
- Savings depleting at an alarming rate
- Dependant on part time jobs, overtime, commissions or bonuses to pay for living expenses
- Living from paycheck to paycheck
- Paying only the minimum payment for credit cards monthly and outstanding balance of the credit card increases every month
- Going over the credit limit of the credit card
- Frequent cash withdrawals from credit card accounts
- Receiving notices from banks or creditors for non-payment of debts
- Denied credit because of a negative credit report
- Borrowing money to pay earlier debts
2) What needs to be done when a person find himself buried in debt?
The first thing would be to immediately relook at their budget for areas in which they can cut back. In addition to this, they must also have the outstanding balances of all loans and payments listed in their budget.
Should this be insufficient, please visit the nearest AKPK branch for assistance from our qualified financial counsellors.
3) What is the criteria to qualify for Debt Management Program?
The criteria is that the individual:
- Has a positive net disposable income after meeting all expenses
- Does not exceed RM2 million in debts
- Is not under any advanced litigation process such as bankruptcy notice/creditors petition etc.
- Is not adjudged bankrupt
It is also important to note that AKPK is only able to restructure loans which are taken in the capacity of an individual, and is not able to restructure business loans.
1) How do people get themselves into debt trap?
- Since inception up to 31 March 2014, 261,578 individuals have attended our counselling services and from that, 105,560 customers have applied to enrol into our Debt Management Programme.
- According to our statistics, the main reason our DMP customers default on their loan repayments is the poor financial planning.
- Please find the breakdown as below:
2) Having financial problems sometimes can be humiliating, is AKPK discreet with their customers’ privacy?
- AKPK maintains a high level of privacy and confidentiality as we deal with sensitive information regarding individual’s financial affairs.
- With the coming into force of the Personal Data Protection Act on 15 November 2013, AKPK is more obliged to keep all information private.
3) Why do you choose to work with AKPK?
- In my opinion, AKPK is a noble organisation to work with because we are able to help financially distressed consumers without charging a fee for our services and I’m proud to be a part of this organisation.
- I, personally, chose to work with AKPK because I am able to impart the knowledge I have on personal financial management to people I meet.
- In addition to this, I get a sense of accomplishment when I am able to assist consumers handle their debts.
How to help people to get out of debt?
A step-by-step recommended process of debt control, hence debt-free.
- Acknowledge the debts you have
- Assess your current financial position
- Prepare an action plan to reduce debts
- Create a financial plan and adhere to it strictly
- Review and revise your financial plans periodically to ensure it remains relevant with your current finances.
What are the success rate for AKPK in helping people out of debt trouble?
As at 31 March 2014, 5,165 cases successfully exited from DMP with total outstanding of RM 203.1 million.
Financial Management principle
1) What is the key to success for getting out of debt?
- Increasing savings
- Living within one’s means
- Reducing debts
- Sell some of your non-income generating assets/belongings
2) What will be the fate of a person who does not have a positive income?
- While this individual may appear to stay afloat for a while, he will most likely end up in a financial predicament due to the lack of positive income.
- This is why, as a general rule, we recommend keeping the debt to income ratio of not more than 40% of the gross monthly income.
3) If you are in debt trouble, will you go to AKPK?
- Most definitely yes. There aren’t many organisations which are able to assist financially distressed consumers the way AKPK can.
Training by Desmond Chong
Desmond is conducting a series of training for the readers of KCLau.com
Premium Webinar Members (PWM) can get full access to the previous training conducted here:
– How to Manage Your Debts Effectively
– How to Use Your Credit Cards Wisely