Alternatives to Bankruptcy

Do not ignore your creditors' letters of demand and statutory demands, or writs of summons from the court. If these demands or claims are unsatisfied, it may compel your creditors to commence bankruptcy proceedings against you. You can be made a bankrupt even if you refuse to respond to your creditors or accept service of legal documents.

Please note that bankruptcy should be considered as a last resort.

• Social stigma of being declared a bankrupt;
• Your assets become vested in the Official Assignee and divisible among your creditors;
• There is a statutory requirement to file Statements of Affairs and Income and Expenditure statements, and you may be subject to thorough investigations by the Official Assignee into your financial affairs;
• You will need to make monthly payments to your bankruptcy estate for the benefit of your creditors;
• You will be required to disclose your bankruptcy status if you are obtaining credit of more than S$500 from others;
• There are restrictions on travelling overseas; and
• You cannot manage a business or act as a director of a company without prior approval of the High Court / Official Assignee.

There is no automatic discharge from bankruptcy in Singapore. For further information on discharge from bankruptcy, please refer to Information for Bankrupts – Discharge from Bankruptcy.

You should only commence bankruptcy proceedings against your debtor after all avenues for recovering debts have been explored and proven unsuccessful. It is not an instant remedy for recovery of debts.

• It is costly;
• Full recovery of debts is unlikely;
• Loss of interest;
• Earning capacity of debtor will be adversely affected and in turn, his ability to settle his debts;
• There is no priority for unsecured creditors;

If the bankrupt is discharged by the High Court or the Official Assignee, even though the bankrupt’s debts were not paid in full, you will not be able to pursue your claims against the discharged bankrupt any further.

Debtors may enter into a private arrangement with creditors to:

• pay debts by instalments;
• reschedule repayments;
• get an extension of time to liquidate assets; or
• seek other financial sources to repay the debts.

Debtors should inform creditors truthfully and completely of their latest financial position. They should provide information and documentary evidence readily to prove their current financial position.

Debtors should not make empty promises after entering into alternative repayment arrangements. Debtors must make serious efforts to keep to the new repayment arrangements.

Debtors may also seek assistance from Credit Counseling Singapore at the following contact:

Credit Counselling Singapore

#12-01 Maxwell House, 20 Maxwell Road,

Singapore 069113

General line: 6338 2663 | Fax: 6338 6586

Email: enquiry@ccs.org.sg

Website: http://www.ccs.org.sg 

Debtors may apply to court for an interim order for a voluntary arrangement, which is a negotiated debt settlement under Part V of the Bankruptcy Act. The debtor must disclose his assets and liabilities, and make a proposal on how he intends to settle his debts with various creditors. If the proposal is accepted by creditors and implemented successfully, it would benefit the debtor and his creditors.

If you are a debtor being sued by your creditors in civil proceedings, you may negotiate for a settlement on repayment of debts and thereby avoid bankruptcy.

This information presented is by no means exhaustive on bankruptcy matters. You may wish to consult your solicitor before making any decision concerning bankruptcy matters. If you are unable to afford a solicitor, you may obtain oral legal advice from the Legal Aid Bureau, at the following address:

The URA Centre, East Wing
45 Maxwell Road, #08-12, Singapore 069118
Tel: 1800-3251424 

The Debt Repayment Scheme (DRS) is a repayment scheme to assist debtors who have a regular income and debts not exceeding S$100,000, to avoid bankruptcy.

The DRS is triggered by a bankruptcy application. When such an application is made to the High Court and the debt owed does not exceed S$100,000, the High Court will refer the debtor to the Official Assignee for an assessment of the debtor’s eligibility and suitability to enter into the DRS. If the debtor satisfies the relevant criteria, an administrator will devise a repayment plan requiring regular debt repayments to the creditors over a fixed period of time. While in the DRS, the debtor must comply with the conditions set out in the plan, or risk being removed from the DRS, after which he may be made bankrupt.

For further information, please refer to the DRS page in this website.

Minlaw FAQs on Individual Insolvency

Information for Bankrupts

If you have any further queries on bankruptcy, please contact the Official Assignee's at:

Tel: 6325 1500

Email: ipto_enquiry@ipto.gov.sg

A debtor can become a bankrupt on the filing of a bankruptcy application in the High Court by either the debtor or the creditor.

If a debtor is unable to pay his debts of at least S$10,000, the High Court may declare him a bankrupt upon the bankruptcy application.

The Official Assignee does not provide advice on the procedures for filing a self petition. Debtors may wish to refer to the Bankruptcy Rules for the procedures. A copy of the Bankruptcy Rules can be obtained online. Debtors may also wish to refer to the Supreme Court’s website for further details on bankruptcy proceedings.

Self-application for bankruptcy should not be considered as an option to relieve one’s financial problems. Bankruptcy should be considered only as a last resort. Alternatives to bankruptcy should be considered instead.

Before filing a bankruptcy application, a creditor will issue a notice known as a Statutory Demand, demanding payment from a debtor. If the payment is not met within the time stated in the Statutory Demand, the creditor will file a bankruptcy application in the High Court and a hearing date will be given. If payment is not made by the hearing date, the High Court may proceed to make a Bankruptcy Order and declare the debtor bankrupt.

Under the Bankruptcy (Fees) Rules, any creditor or debtor who wishes to file a bankruptcy application in the High Court must pay a deposit of S$1,600 to the Official Assignee for the administration of the bankrupt’s estate. The petitioning creditor may recover this deposit subsequently from the bankrupt if there are sufficient funds in the bankrupt’s estate. The deposit of S$1,600 will not be refunded for a debtor’s self-petitioned bankruptcy,

In the event that a bankruptcy application is dismissed by the High Court or withdrawn, the Official Assignee will retain S$250 as preliminary administration costs under the Bankruptcy (Fees) Rules and refund S$1,350 to the petitioning creditor.