Confused or Overwhelmed by Bankruptcy?

Bankrupt individuals are required to pay monthly contributions, which go to your bankruptcy estate. Once you are discharged as a bankrupt individual, that lump sum of money will be distributed to your creditors. Your Official Assignee will determine the required monthly contributions as well. As per Section 86A of the Bankruptcy Act states, the contributions are determined by your current monthly income. Factors such as any changes in your monthly income, how much your spouse earns, and the cost of maintaining your family and yourself are also taken into consideration while determining the required monthly contribution.

Under Singaporean law, there are various ways to get out of bankruptcy. Under Section 125 of the Bankruptcy Act, your Official Assignee can issue a certificate discharging you out of bankruptcy, after you’ve paid a target contribution. The target contribution is determined by the Official Assignee, and it is this very target that needs to be reached in order to receive a discharge from bankruptcy. It is also worth noting that if your monthly contributions add up to your target contribution at certain points of review, you will also be eligible for discharge.

As a first-time bankrupt individual, if you pay your target contribution in full after three to five years, and more than half of your creditors have no objection, you will be discharged from bankruptcy.

For repeat offences of bankruptcy, each of these timelines mentioned above will be extended by an additional two years.

If you have paid your target contribution in full within seven years, your name will be removed from the public record after five years of the discharge. After seven years, however, if you have not paid the target contribution in full, you can still be eligible for a discharge, but your name will remain on the record permanently.

To apply to be discharged from bankruptcy, you will need to do so through your Official Assignee; you can apply to the Court for an order of discharge. If the Court finds that you are able to pay the target contribution.

Your creditors cannot sue you for the monies that you owe them before bankruptcy. They ought to have lodged their claim with the Official Assignee. However, should you find yourself in a position where you had become indebted to new creditors after becoming bankrupt through business dealings or a new personal loan, then the new creditors will still be able to commence legal proceedings against you. However, if you are fined for breaching the law, such as for traffic offences, you will have to pay up the stipulated amount.

Section 78 of the Bankruptcy Act describes in detail what will happen to your possessions, stating that creditors take ownership of all of your property, except for:

• Any property you’re holding on trust
• Items necessary for your job (including tools, books, your car)
• Items necessary for your satisfying your “basic domestic needs” (this includes clothing, furniture, and yes, your HDB home)
• Your income (after payment of your monthly contribution)
• Any bonus or annual wage supplement as a part of your income
• Your property which is excluded under any other written law.
• Items that you will have to give up, however, include investments, bank accounts, and insurance policies, for instance.

Banks will usually terminate all your current credit cards as soon as you are listed bankrupt in the public record. When applying for a credit card in the future, you will have to declare your past status as bankrupt, and in most cases, your application won’t be approved.

Yes, you can, but you must apply for permission from your Official Assignee at least two weeks before your trip, and provide the reasons, destination and length of travel. Work trips will have to be supported by a company letter. If your job involves frequent travel, you can make a block booking for your travel periods instead of applying for each trip. However, final approval will depend on your Official Assignee’s review of your performance.