Are you in Debt?
In Singapore, around 1,800 people fall into bankruptcy every year*. The main reasons for bankruptcies include overspending, business failure and unemployment. As of 31 May 2017, there were 18,034 bankrupts in Singapore.
* This statistic is provided by MinLaw (Straits Times, Feb 17, 2017)
In Singapore, if someone owes his/her creditor more than $15,000 and he/she is unable to pay this, the creditor is entitled to file for his/her bankruptcy.
The first step to commencing bankruptcy is to serve a Statutory Demand on the Debtor who is unable to pay his/her debts. The Statutory Demand is an official document making a formal demand for the repayment of a debt within 21 days and failing which the Creditor is entitled to file for bankruptcy proceedings against the Debtor. The filing of bankruptcy involves submitting a Bankruptcy Petition to the State Courts of Singapore and a court hearing date will be fixed for the Debtor to attend. If the Debtor is still unable to pay the debt by the Court hearing date, the Debtor may be declared a bankrupt.
If a Debtor has less than $100,000 in unsecured debts, the Debtor may be able to avoid bankruptcy by entering into a Debt Repayment Scheme. This scheme is administered by an Official Assignee. The debt could be repaid within a fixed period of time (but no more than five years). After which, the Debtor will be released from paying his/her debts and he/she can start afresh.
If a Debtor is declared a bankrupt, the Official Assignee will be appointed to deal with the Debtor’s financial affairs. The Petitioning Creditor has to pay a Bankruptcy deposit of $1,850 before the Official Assignee is appointed to deal with the Debtor’s financial affairs. There are also other fees to pay, such as Court fees and legal fees.
What happens to the Bankrupt?
The Bankrupt has to submit a “Statement of Affairs”, including his/her assets, liabilities and other creditors, as well as commit to a reasonable debt repayment plan to pay off all the debts. The Bankrupt needs to surrender his/her assets to the Official Assignee, which will be sold and the proceeds will be distributed to the Creditors. The Bankrupt has to abide by the Bankruptcy Act and cooperate with the Official Assignee by submitting all relevant documents and abide by any repayment scheme which will be decided by the Official Assignee.
The Bankrupt will also be restricted in certain ways, for example, he/she will find difficulty looking for jobs in the public sectors and certain jobs in the finance industry, and any potential employer will have access to the Bankrupt’s public profile.
The Bankrupt will also face restrictions managing a business or becoming the director of a company without the Official Assignee’s or Court’s approval. The Bankrupt is unable to sell, transfer or give away any property as the decision will lie with the Official Assignee. The Bankrupt does not have the power to continue or commence any legal proceedings without the Official Assignee’s permission.
The Bankrupt will normally be prohibited from leaving the country without the permission from the Official Assignee and it will be difficult to obtain any credit of more than $1,000 from any bank or financial institution. The Bankrupt’s creditworthiness will also be affected.
Regardless whether you are a creditor or a debtor, if you wish to seek legal advice in connection with Bankruptcy, please do not hesitate to contact us. We are here to help you.
We also deal with liquidation of Companies and obtaining an order for Judicial Management.
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