Bankruptcy laws focus on the fair and just liquidation of a debtor’s possessions to repay their creditors. Singapore’s Bankruptcy Act protects both parties from creating a potentially massive ripple in the local economy that might cause instability by giving them sufficient resolution that stabilizes both sides’ financial situation.
In doing so, debtors can repay creditors. On the other hand, creditors can collect any possession of good equity from forgiving the creditor’s debts.
Truthfully, filing for personal or business bankruptcy in Singapore sounds quite scary. However, it’s a tremendous convenience for anyone who needs a way out of a financial rut and creditors looking to recover their investments.
How Does Bankruptcy Work
An individual or business that declares bankruptcy is asking for government intervention and mediation to correctly resolve a situation with a fair solution to all parties. The Bankruptcy Act of Singapore aims to protect creditors’ rights to collect their dues and debtors from exhausting all means to repay their debts.
Once your bankruptcy application receives approval, you’ll be summoned to a court hearing. These are short court-and-party-present meetings that discuss the official executors of your estate, the total sum and value your creditors expect, and executors the court will assign to you to execute your property.
In Singapore, a creditor can file bankruptcy on your behalf without informing you if you have debts about S $15,000 and above (as of this writing, creditors can only file bankruptcy for debtors if they have above S $60,000 in debt until 19 October 2020).
You can voluntarily declare yourself or the business bankrupt if you have debts ranging from S $15,000 above on your own too.
When Can You Consider You Or Your Business Bankrupt?
If you’ve exhausted all means to adjust your budgets and improve your financial situation, you can declare personal or business bankruptcy in Singapore.
You can prevent a bankruptcy order and have an effective debt repayment scheme with the help of debt consolidators and management companies. However, if the following factors have reached extremes, it’s genuinely time to consider going through bankruptcy proceedings.
- You’ve Accumulated So Much Debt
Creditors can declare you bankrupt if you’ve failed to repay your loan to the point you’re beyond making the bankruptcy with an outstanding loan above S $15,000. Debt repayment scheme can be so much harder to solve once you get trapped in loads of debts.
Too much debt is due to poor budgeting. Borrowers must treat loans and other financing’s as privileges and treat financial commitments with full respect. Otherwise, it’s a one-way ticket towards a bankruptcy order and waiting for a hearing date to divide your assets and liabilities.
You’ve Paid Lower or No Repayment In The Last Two Months
Truthfully, you’ll need to reach SGD $15,000 in accumulated debt to go through bankruptcy proceedings. However, failing to repay your debt entirely or at all in the last two months is already sufficient reason to consider or prepare for future bankruptcy proceedings.
Your Income is Going Nowhere
The only way to pay your debts and avoid involving the high court and bankruptcy proceedings is to have a stable income. Debt consolidator plan can work with your income and give you an exceptional low-interest repayment scheme to avoid having to go through a bankruptcy application.
Else, you’ll need to declare yourself in deep debt, especially if you have zero income. Fortunately, bankruptcy in Singapore is accessible for any indebted individual with difficulty or cannot pay their debts.
Can You Voluntarily Declare You’re Bankrupt?
Any debtor who believes they cannot pay their dues can declare themselves bankrupt in Singapore — but with a few caveats.
Only debtors with more than S $15,000 in unpaid debt can declare bankruptcy. Truthfully, creditors are likely to file your bankruptcy Singapore on your behalf. If they have yet to proceed with the process, you can initiate it on your own.
How Can You Begin Filing For Personal Bankruptcy?
You’ll need to follow a set of rules to successfully declare you are bankrupt Singapore. Six necessary steps include sub-steps that can become complex and difficult. However, the process aims to slow down individuals who take bankruptcy rules and rights in Singapore lightly.
Here are all the steps to commit yourself to bankruptcy, liquidate your assets successfully, and pay all your creditors to completely wipe off your total debt repayment.
Accomplish a Handful of Forms
You’ve highly-likely expected to finish and submit a handful of forms to confirm and finalize your bankruptcy application — and you’re right.
You’ll need to accomplish four types of forms to initiate and document your bankruptcy. These are the following:
Debtor’s Bankruptcy Application
This form is self-explanatory. You’ll need to fill up every single information required to accomplish all bankruptcy applications.
Affidavit in Support of Debtor’s Bankruptcy Application
You can print out the affidavit that supports bankruptcy applications by downloading it from the Ministry of Law’s website.
Statement of Affairs
This form contains information about your current personal and business income, assets, liabilities, employment status, monthly expenses, miscellaneous costs, and others.
Affidavit Verifying Statement of Affairs
Like bankruptcy applications, you’ll need to fill out the affidavit and notarize the document for legal documentation.
Provide the Singapore Insolvency Office With an Insolvency Deposit
You can find the Insolvency Office in the URA Centre’s East Wing. The Ministry of Law runs the Insolvency Office, which will require you to pay a deposit of S $1,850.
Bring Documents To the Supreme Court’s Legal Registry
The Supreme Court’s Legal Registry will notarize and verify your affidavits in support of the debtor’s bankruptcy and statement of affairs. You will submit the documents you filled out here.
Affirm Verifying Statement Affairs and Affidavit in Support of Debtor’s Bankruptcy Application Before a Commission for Oaths
Then, you’ll present yourself before a Commissioner of Oaths. They will provide the final stamp and seal to verify the legality and conscious decision you’ve undertaken going through with your bankruptcy application.
Receive The Date to Collect Bankruptcy Documents from LawNet Service Bureau
The LawNet Service Bureau will file all your documents and tell you about the total fees you’ll need to address to initiate and fully process your bankruptcy.
Attend the Bankruptcy Hearing at the Appointed Date and Time
Once you’ve received the scheduled hearing date, make sure to present yourself. If you’ve undergone an accident or sickness, you can write to the Registrar of the Supreme Court for a later hearing date.
In worse case scenarios, you need to inform the high court of a notice that you were in such a bad position to deal with the appointed hearing time, the court may apply for some exemptions due to this.
High court may apply an official assignee to deal with the rescheduling of hearing, the high court will also check your debts declaration and review these debts to consider another appointment with them. The high court will also demand supporting documents as to why you are unfit to attend the hearing.
Bankruptcy Filing Requirements
Only Singaporeans can declare themselves bankrupt. Foreigners cannot declare bankruptcy, but they can face charges that creditors can file against them for being unable to pay their dues. According to bankruptcy law, creditors can file bankruptcy on behalf of Singaporeans who are in deep debt
Furthermore, only individuals above the age of 21 with employment can apply for a loan. Therefore, this age is the minimum figure for bankruptcy declaration.
Creditors and debtors can apply for government aid through a bankruptcy application if they fulfill the following requirements.
- Currently Living in Singapore
- Owns Property in the Country
- Permanent Resident in Singapore for One Year
- Ran a Business in SG for One Year
Owes a Minimum of S $15,000 in Accumulated Debt
Debtors with over S $15,000 and months of missed repayments can declare bankruptcy on their own. Alternatively, creditors can file and declare bankruptcy on a debtor’s behalf if the total amount increases beyond the indicated minimum unpaid amounts.
Your Lender Can Declare Your Bankruptcy
There are some caveats as to when your lender can declare your bankruptcy. These are the following.
- Failed to Comply With Statutory Demand Within 21 Days
- Failed to Comply With Court-Issued Payment
- Fled the Country
If you have below S $15,000 in unpaid amounts, they cannot issue you with statutory demands and court-issued payments. However, if you’ve fled the country while having unpaid amounts below S $15,000, they can file both bankruptcy and possible felony charges against you.
Costs For Filing Your Bankruptcy
You’ll need to pay a deposit of S $1,850 to the official assignee. The official assignee is in charge of executing the debtor’s estate and other properties they own.
You’ll need to pay a bankruptcy lawyer an additional fee for their service on top of the S $1,850 amount.
The deposit of S $ 1,800 will return to you if the Insolvency Office rejects your bankruptcy application. The S $50 deducted is part of the preliminary administration costs. However, you won’t retrieve this amount once they approve it.
What Happens After Your Bankruptcy Hearing is Concluded?
After 21 days of your bankruptcy order, you’ll meet with your official assignee’s office to know everything about your bankruptcy responsibilities. The official assignee will show you the complete record of your declared assets and liabilities.
Next, your official assignee will brief you about their responsibilities. Their duties are to:
Execute your Estate:
They will arrange everything including the following: your monthly supplementary payments for the repayment requirements, liquidating your existing valuable assets, and determine your supplementary payment’s target contributions
Manage External Affairs:
The Official Assignee will oversee all your activities or commence court actions that will benefit the insolvency’s resolution concerning both parties’ rights.
Assess Your Conditions for Bankruptcy Release:
You’re classified as a bankrupt individual until you’ve met all the objectives that will discharge you from all your responsibilities to your creditors.
Will Bankruptcy Protect Any Non-Business Assets?
All your properties of value, including items with equity, stock market investments, the collateral you have declared, and others, the OA will liquidate with your knowledge. However, it isn’t an excellent option to hold back.
Bankruptcy protects your assets from creditor abuse, but you’ll want to declare items and possessions of great value to speed up your bankruptcy release.
Here is a list of assets that an OA cannot seize or liquidate:
- Properties you hold as a trustee
- HDB flats under your name
- CPF contributions
Life insurance policies
- Possessions involved in your personal profession or an existing (and undeclared bankrupt) business
- Essential furniture
- Monthly income after monthly contribution deduction
- Annual bonuses from your employment.
How Do I Repay My Creditors?
All the proceeds that come from selling your assets will go to the bankruptcy estate. The OA will ask you to pay fixed monthly contributions for a brief period if your repayments are insufficient.
The OA cannot have you pay beyond the critical levels of income-to-debt ratio. Thankfully, the law permits OAs to extend your payment period without interest despite the length of time involved.
Alternatives to Use Before Filing for Bankruptcy
It’s essential to remember that bankruptcy is something to take seriously and not an easy way out of debt. The consequences involved during your time as a bankrupt won’t allow you to do the following:
- Borrow more than S $500 without informing the lender you are bankrupt
- Leave the country without the OA’s permission
- File charges against other parties or proceed with divorce and adoptions
- Manage a business
Become a trustee in any property
Bankruptcies involving debts above S $15,000 can take more than 5-10 years to resolve, Therefore, avoid using bankruptcy to get out of debt.
Invoke Your Business Insurance Fitting For The Situation
If you have payment protection insurance for your business, you can use that to repay your financing. Truthfully, it can be challenging to file a claim with insurers, but if your situation qualifies, it can be quite a boon
Take Out a Bank Loan
If you’re facing losses, a bank loan can ease you out of it. However, be prepared to present an effective payment plan that resolves your unpaid dues and provides banks acceptable profit in the process.
Use a Personal Loan From Moneylenders in Singapore
If you have bad credit, you can get help from a reliable moneylenders instead. They can offer decent flotation amounts that can stabilize your cash flow while improving your business’ fiscal situation.
If you have yet to find a trusty moneylender, use Loan Advisor’s comparison database to find the perfect one for you. Read reviews and learn more about the best moneylenders you can trust now.