​What happens if you file for bankruptcy in Singapore 2023?

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Written By Loanbuddy Singapore
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bankruptcy

​What happens if you file for bankruptcy in Singapore 2023?

The data from the Ministry of Law’s Insolvency Office Singapore shows the total number of bankruptcy applications filed in 2022 stood at 3,648.The applications were filed by either individual on their own or by their creditors. The numbers are 15.4% higher than that of 2021. (source BusinessTimes)

If you are indebted for at least $15,000, you may voluntarily file a bankruptcy application in Singapore yourself or make your creditors file on your behalf. Bankruptcy in Singapore is not what many debtors would prefer while planning out their finances. However, in extreme scenarios, it’s the suitable option left and an applicant rarely understands what needs to be done to face the consequences. The applicants often want an advisor to resolve their debts.

If you are someone in such a situation where you need to file for bankruptcy in Singapore, here’s what you need to acknowledge what happens when you file for bankruptcy in Singapore.

What is Bankruptcy?

bankruptcy

Bankruptcy in Singapore is a state where you are unable to repay your debt outstanding of $15,000 or more. Other technicalities are also involved in the procedure. If you are declared bankrupt, your assets will be sold proportionately except for your HDB flat. The proceeds from the assets will be put into bankruptcy estate. Generally, the OA (Official Assignee) is assigned for asset management, however in case of extremely substantial debt, the creditors may appoint a private trustee in bankruptcy (PTIB), a lawyer or an accountant.

When can an individual file for bankruptcy in Singapore?

You can voluntarily file for bankruptcy in two cases.

  • When it’s likely that you will be unable to repay his loans.
  • No other alternative arrangement has been made with your creditors for repayment.

However, your creditors can also file a bankruptcy application against you if they are not sure about your repayment capability.

In Addition, it is important to note that the Singapore High Court can declare you bankrupt when you don’t respond to the creditor’s demands.

What are the effects of filing for bankruptcy in Singapore?

bankruptcy

In Singapore, bankruptcy is no longer seen as a negative indicator. It is in fact, a sensible move especially when you have exhausted all resources to repay your debts. Here’s what happens when you file a bankruptcy application in Singapore-

  • Your Debt Accumulation Is Stopped– As soon as you file for a bankruptcy application, your loan accounts freeze at a specific cap. As a result, your interest no longer remains in force. Once you are declared bankrupt by the court, the official assignee sets a reasonable amount for monthly contribution considering your family’s necessities. After the debt restructuring, debt repayment becomes easier.
  • Creditors Cannot Take Legal Action During The Proceedings– Singaporean law doesn’t permit creditors to take legal calls against you after you file for bankruptcy. So you are free from the tension of being sued for non-repayment.
  • Submission Of Statement Of Affairs And Monthly Contributions– The Bankruptcy Act of Singapore requires you to furnish the record of your assets and liabilities. Also, it becomes your first duty to repay the monthly contribution determined by the OA. A fixed amount from your salary will be deducted each month and you will be given a minimal amount for carrying out your day-to-day expenditures.
  • Charge Of assets Goes In The Hands Of The Official Assignee– You have to surrender your assets to the OA and then only you will be able to get help to repay your loans. Assets include gifts, movable assets, and immovable property held overseas as well. However, no action can’t be taken against the following-
  • The necessities for you and your family including your HDB flat, CPF account balance, and furniture.
  • Tools and any possession which is essential to perform your job.
  • Life insurance policies that are taken for the family’s well-being.
  • Property help for a third party as a trustee.
  • The balance from salary after deducting monthly contributions including any bonus that forms part of the salary.
  • Your Name Will Be On Records Of Bankruptcy Register– All bankrupts’ names are registered in the records for reference. Your employer will also get notified once your name appears in the register. But you can get your name removed from the register after a time depending upon how easier and simpler you get out of the bankrupt estate. Those who pay their monthly contribution on time consistently can get their names removed after 5 years.
  • Your Every Overseas Travel Will Need Approval From OA– Every bankrupt will need approval from the official assignee and inform Singapore courts for overseas travel. The approval is rarely received except for the reasons related to job. Without approval, the bankrupt can also get imprisonment for a period of up to 2 years. Additionally, a penalty of $10,000 will be levied. So if you want to travel, you have to make sure to get approvals and inform the courts. The approval depends on the category in which you fall as bankrupt. There are also other travel privileges you can have depending on your Zone.

Normally, the bankrupts with acceptable conduct are categorized in Green Zone, However, for unsatisfactory conduct, Red Zone is assigned. You can understand the difference with the following table-

Green Zone (with satisfactory conduct)Red Zone (with unsatisfactory conduct)
Travel permits can be granted for more than 1 month to any country.Not allowed for overseas travel at all.
Discharge from bankruptcy can be assessed after 5 years.Managing any business or becoming a director for any company is not allowed.
 Discharge from bankruptcy estate can be assessed after more than a period of 5 years.
  • Difficulty in landing a job– You will have limited job options once you are declared bankrupt. Especially in the public sector and finance sector, you will not be eligible to apply due to lower credit ratings. Plus, it’s very unlikely to get a job at the managerial position in any company.

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