Bankruptcy should be the last resort as it affects many areas of your life. Find out what it means to be a bankrupt in Singapore and how to get discharged.
- Consider bankruptcy only after exhausting all avenues.
- Bankruptcy leaves a black mark on your credit report.
- You'll have problems borrowing even after you're declared debt-free.
What is bankruptcy?
You're at risk of being bankrupt if you are $15,000 or more in debt and cannot pay up.
If your bankruptcy application shows a debt below $100,000, the Court may refer you to the Insolvency Office to see if you qualify for a Debt Repayment Scheme (DRS).
If you are made a bankrupt, a trustee in bankruptcy will be appointed to take charge of your available assets and sell them to pay your creditors. This may be the Official Assignee (OA), a public servant or a private trustee in bankruptcy (PTIB).
How it affects you
Bankruptcy has far-reaching effects in many areas of your life:
Loss of freedom
As a bankrupt, you can't:
- Leave the country without the OA/PTIB's permission
- Continue in or take up public office
- Be a company director without the approval of the OA/PTIB or the Court
- Sue any party in court (except for personal injury or matrimonial proceedings) without the OA's/PTIB's approval
Bad credit score
Bankruptcy is a black mark on your credit history. It will be more difficult for you to apply for loans, mortgages and credit cards in the future.
Being unable to borrow
Credit bureaus report any default in payment for 3 years from the date of settlement, and bankruptcy data for 5 years from the date of discharge. Banks take this seriously, making it hard for you to borrow money even if you need to.
Lifestyle changes
Bankruptcy forces you to cut back on your expenses. It can change your lifestyle and affect your relationships with your family and friends. It can affect your career.
Take serious steps to avoid bankruptcy.
Note
You may have other options. Visit the Ministry of Law's page on the options available to you to avoid bankruptcy, including private and voluntary arrangements.Getting discharged
If you have been made bankrupt, the following rules apply:
- First time bankrupts will generally be eligible for discharge in 5 to 7 years
- Repeat bankrupts will generally be eligible for discharge in 7 to 9 years
- If a bankrupt doesn't pay the target contribution (an amount set by the trustee at the start) in full by the time he is discharged, his bankruptcy record will be permanently kept on a public register maintained by the OA
- Bankrupts who pay their target contribution in full by the time of discharge will have their name and particulars on the register for 5 years, and removed thereafter
Note: If you were made bankrupt before 1 August 2016, you may only get discharged through the following means:
- By Court order - The Court will consider the OA’s report on your conduct and repayments during bankruptcy.
- By Certificate of the OA - If your debt falls below $500,000 after 3 years of bankruptcy, the OA may discharge you based on the period served, payments made and your conduct.
See also: Bankruptcy Information Sheet for Debtors & Bankrupts
If you're facing bankruptcy
Declaring bankruptcy should be your last resort after exhausting all other avenues. It's definitely not an easy way out.
If you find yourself facing bankruptcy, contact Credit Counselling Singapore (CCS) to find out if you qualify for the Debt Management Programme (DMP).
