If you owe money in excess of $10,000 and cannot pay up, you can be made a bankrupt.
However, when a bankruptcy application is made to the court and the debt owed does not exceed S$100,000, the Court shall refer the debtor to the Insolvency and Public Trustee’s Office for an assessment of the debtor’s eligibility to enter into the Debt Repayment Scheme (DRS). Read more about DRS here.
In the event that you are declared a bankrupt, the Official Assignee (OA), who is a public servant in charge of administering all your affairs in bankruptcy, will take stock of your available assets and sell as many of these as possible to pay your creditors. Any income you receive while you are a bankrupt will also have to be disclosed to the OA. You will be required to contribute a portion of your income to the bankruptcy estate to be paid to your creditors.
Bankruptcy can significantly change your lifestyle and may affect your relationship with friends and family. It will also affect your career. You should therefore avoid bankruptcy where possible.
As a bankrupt, you cannot:
- Leave the country without the OA’s permission
- Continue in or take up public office
- Be a company director without the OA or the Court’s approval
- Sue any party in court (except in an action for personal injury) without the OA’s approval.
Bankruptcy is a black mark on your credit history, and this will make it difficult for you to get loans, mortgages and credit cards in the future. Credit bureaus will display default records for three years from date of settlement, as well as bankruptcy data for five years from the date of discharge.
There is no automatic discharge in Singapore. You can obtain a discharge from bankruptcy through:
- Annulment of bankruptcy. This is possible if you pay off your debts in full, or if your creditors agree to an arrangement whereby you repay your debts in part or in full.
- Discharge by the Courts. The Courts will take into consideration the OA’s report on your conduct during bankruptcy.
- Discharge by certificate of OA. The OA will take into account the period of bankruptcy, the payments made for the benefit of creditors and your conduct in deciding whether to discharge you after three years in bankruptcy, if your debt is below $500,000.
The above information is prepared in collaboration with the Ministry of Law.