How to File for Bankruptcy in Singapore

What happens when someone goes Bankrupt?

When someone can no longer pay off their debts, they may become bankrupt. In Singapore, someone owing money can choose to file voluntarily for bankruptcy if the debts they can’t repay are worth $15,000 or more. Sometimes, however, the creditors that the debtor owes may apply to make the debtor bankrupt, if they believe the money owed to them cannot be repaid.

The assets of someone declared bankrupt are sold, and the money put into a bankruptcy estate. Note that certain assets are protected from bankruptcy, such as HDB flats, so money from these will not form part of the estate.

An officer assigned to the court, called an Official Assignee (OA), will manage the bankruptcy estate, administering the debtor’s assets and distributing them amongst the creditors as equitably as possible. See below for more details on the OA’s role. Sometimes, a private trustee may manage the bankruptcy estate, such as a lawyer or accountant.

If the bankrupt person has a job, they must make payments each month into the bankruptcy estate, and these contributions go towards fulfilling a target set by the Official Assignee. Property in the estate may not be used to pay off this target figure.

Once the target amount of money has been paid off, the bankrupt is discharged from their bankruptcy.

When should I file for Bankruptcy?

If you know there is a low likelihood of you being able to fully repay your debts, and you cannot make alternative private arrangements with your creditors to settle the debts, then bankruptcy may be a good option for you.

How can Bankruptcy help me?

1. Your debts will not grow any bigger: once a bankruptcy order has been made and issued by the High Court, your creditors cannot add interest on the amount you owe, so the debt amount is frozen at that point.
2. The amount you have to repay each month is lower: if your monthly repayments have become unmanageable, then the OA can specify a more realistic amount that you should repay every month. They will consider how much you need to support yourself and your family when calculating monthly payments.
3. You can’t be sued for debts by creditors: once a bankruptcy order has been issued, creditors are banned from bringing legal proceedings against you to recover money owed prior to your bankruptcy.

What are the requirements for filing for Bankruptcy?

A bankruptcy filing can only be made (either by debtor or creditor) if one of the following scenarios apply to the debtor:

• They are domiciled in Singapore
• They have property in Singapore
• They have carried on business in Singapore for 1 year or more
• They have had a place of residence in Singapore for 1 year or more
• They have been ordinarily resident in Singapore for 1 year or more

Furthermore, the debt owed must be at least $15,000, payable immediately, enforceable in Singapore, and not be capable of being repaid by the debtor.

If a Singapore Permanent Resident meets the above criteria, then they can also file for bankruptcy in Singapore. More information on this is available in our article on bankruptcy filing FAQs for Singapore Permanent Residents.

If the bankruptcy application has been filed by a creditor, then the debtor is classed as unable to pay if one of the following apply:

• The debtor has not complied with a statutory demand to pay the debt for 21 days or more
• The debtor didn’t obey a court-issued execution to pay the debt
• The OA certifies that the debtor can’t pay the debt
• The debtor has left the country to avoid paying the debt

Should I file voluntarily or wait for a creditor to file?

If you self-declare, you can stop the interest on your debts accumulating. If you wait for the creditor to file, it will keep rising.

Regardless of whether you file voluntarily or not, as the debtor you will likely have to bear the cost of the bankruptcy application deposit.

How to file for Bankruptcy

Step 1: Relevant Forms

You must obtain and complete the forms to facilitate the:

• Application for the Debtor’s Bankruptcy
• Affidavit supporting the debtor’s Bankruptcy Application
• Statement of Affairs listing your assets, liabilities, employment status and monthly outgoings)
• Affidavit verifying this Statement of Affairs.

Step 2: Bankruptcy Deposit

Pay a $1,850 bankruptcy deposit to the OA. You can pay cash at SingPost counters – keep the receipt you get. Alternatively, to use PayNow to make payment, email MinLaw’s Finance Department at finance@mlaw.gov.sg and ask for the PayNow Proxy and payment instruction. Once you have paid, you will receive a receipt within 4 working days.

Step 3: Pay Stamp / CoA fees

You should take the completed documents from step 1 and the receipt you got (step 2) to the Legal Registry of the Supreme Court (found on level 2 of the Supreme Court), and pay the prescribed stamp or Commissioner of Oaths fees.

Step 4: Affirm Affidavits

In the presence of a Commissioner of Oaths, (who can be found on level 3M of the Supreme Court), affirm the two affidavits (Affidavit Verifying Statement of Affairs, and Affidavit in Support of Debtor’s Bankruptcy Application). The Commissioner will stamp and sign the documents.

Step 5: File documents via eLitigation

File all documents via eLitigation once fees have been paid, at the LawNet Service Bureau (found at Level 1 of the Supreme Court). The Bureau will give you a date on which to collect your documents. The time and date of the bankruptcy hearing will be stated on your application.

Step 6: Attend the hearing

You are required to attend the hearing at the time and date stated. If you cannot, you need to write to the Supreme Court’s Registrar and ask for a later hearing date, and give good reasons for this request.

Note: All forms must be typed (apart from the Statement of Affairs which can be handwritten). Do not sign on both the Affidavit Verifying Statement of Affairs and the Affidavit in Support of Debtor’s Bankruptcy Application (see Step 4).

A bankruptcy application can only be made against you by a creditor if you fail to comply with a Statutory Demand (served on you to demand payment). But whoever files the bankruptcy application, the High Court will make out the Bankruptcy Order to you, if the application is successful.

What does filing for Bankruptcy cost?

As we have seen above, a deposit of $1,850 must be paid to the OA by any creditor or debtor wanting to file for bankruptcy.

The creditor, if the application is successful, can recover all of this deposit if there are sufficient funds in the bankruptcy estate to cover it. But if the debtor files for bankruptcy, they cannot recover the deposit fee.

The deposit for an application that is withdrawn or dismissed can be refunded by the OA to the applicant to the amount of $1,800, and $50 is kept as an administration fee.

If you have a lawyer acting for you in a bankruptcy matter, they will also charge their fees on top of the deposit.

I’ve been declared Bankrupt – what happens now?

You must visit the OA’s office within 21 days of the Bankruptcy Order being filed. There you will be briefed on what you must do as a bankrupt, and agree to submitting a Statement of Affairs, which will set out your assets and liabilities to the OA.

You will then start to discuss how to arrange your monthly contribution plan, with help from the officers of the OA.

The OA’s role

The OA has three main duties:

• To supervise the bankruptcy estate: for instance, the OA might plan the monthly contributions which you must pay, through the sale of your liquid assets, so that creditors can be repaid. They will also decide what the target contribution must be (as covered above).
• To manage your affairs: the OA can assess any applications you might make to travel abroad, or to start / defend a court action.
• To help you in getting discharged from bankruptcy: If the OA is satisfied that your conduct has been good and you’ve adhered to your payment schedule, they may recommend you are discharged from bankruptcy early.

What will happen to my assets?

Following a declaration of bankruptcy, your assets will become part of your bankruptcy estate, which will be managed by the OA. Any creditors with proof of the debts you owe them will then be able to receive dividends from your bankruptcy estate.

Typical assets that will make up your bankruptcy estate are:

• Anything which has value and belongs to you when the bankruptcy order is made, or after that date. This also includes overseas assets like property.
• Gifts you received before being made bankrupt.

Money received through the sale of these assets will be added to the bankruptcy estate (but not including the value of the secured debt).

Protected assets

Not all of your assets will be included in the bankruptcy estate—some are protected and cannot be sold to give money to creditors, such as:

• HDB flats (if at least one of the owners is a Singapore citizen)
• Property you hold on trust for another individual
• Life insurance policies held on express trust for your children or spouse
• Any money in your CPF account
• Items you need to use personally in order to run your business, or use in your vocation/employment
• Annual bonuses or wage supplemented you receive as part of your income
• The remainder of your monthly income once monthly contributions have been deducted
• Furniture or equipment your family need.

Creditors can sell assets previously used to secure your loans, which don’t fall into one of the above categories, if you default on your monthly payments.

Will my family be liable for my debts too?

Your family may be liable for your debts if they are co-borrowers of the debt alongside you. This might happen in one of the following scenarios:

• You used a supplementary credit card tied to your parent’s name to borrow money
• You obtained a hire-purchase loan for a car in both your own and your sibling’s names
• You got a home mortgage in your own name and that of your spouse.

If a family member is a guarantor of your loan, and they cannot repay either, they can also be made bankrupt.

You should inform the HDB about your situation if you live with your spouse in an HDB flat, to prevent HDB taking action against you for payments owed to them. The HDB might also assist you in drafting a temporary payment plan, with reduced instalments, to make your financial situation a little easier.

The public Bankruptcy register

The Singapore Bankruptcy register lists the names of bankrupt people, and can be searched freely by employers and the general public, for a fee. But you may be able to get your name removed from the register, depending on how you get your bankruptcy discharged.

Can I still work?

You may work as normal once you are declared bankrupt.

Can I still get divorced?

Yes, you can file for divorce even when bankrupt. Your spouse can also file against you for divorce.

Restrictions on a Bankrupt

As a bankrupt, you are forbidden from:

• Bringing legal action against another individual, (apart from in the case of personal injury you suffer, or divorce) without permission from the OA
• Becoming a personal representative or trustee of any trust or estate, unless approved by the court
• Borrowing more than $1,000 without disclosing your bankruptcy to the lender
• Leaving Singapore without prior permission from the OA
• Managing or helping to manage a business, or acting as a director of a business, without getting permission from the OA or the court.

Responsibilities of a Bankrupt

Following bankruptcy, you’ll have a responsibility to do the following:

• Disclose all your assets to the OA
• Disclose all property you’ve disposed of prior to bankruptcy to the OA, or any property you gave away as a gift or settlement in the 5 years before the bankruptcy
• Keep the OA informed of your contact details and address
• Contribute monthly to the bankruptcy estate
• Attend any meetings with your creditors, unless you’re ill or you have another acceptable reason not to.

Green and Red Zones: Categorising Bankrupts and Their Privileges (or lack of Privileges)

A bankrupt may be said to be in either a green or a red zone, and this determines some of the privileges that may be granted to—or withheld from—them.

The Green Zone is for bankrupts who conduct themselves properly, and they get certain privileges:

• They can travel for more than a month to any country
• They are capable of being assessed as being suitable for discharge from bankruptcy.

However, the Red Zone is used for bankrupts whose conduct is poor. They may have privileges withheld, such as:

• No travel allowance
• Not allowed to manage a business or act as a director
• Not capable of being discharged as a bankrupt.

Summary table: What the OA Considers when Deciding Which Zone a Bankrupt Should be Put In

Getting out of Bankruptcy

There are 4 common ways in which you can get out of bankruptcy:

1. Annulment through full repayment: You fully repay your debts and having the bankruptcy annulled
2. Annulment / discharge through settlement offer: you make a proposal to your creditors to repay what you owe
3. High Court Discharge: you apply to the high court to get them to give you an order of discharge
4. OA discharge: you fully pay off your target contribution (or you are ultimately unable to due to circumstances beyond your control).

You may also have your name taken off the bankruptcy register, depending on which method you use to be discharged from bankruptcy.

Alternatives to Bankruptcy

DRS (Debt Repayment Scheme): Bankruptcy is not always the only way out. If your debts don’t exceed S$150,000 and you have a regular income, you might be referred by the court to the Debt Repayment Scheme, upon the application for bankruptcy. This is a pre-bankrupt alternative, which enables you to avoid bankruptcy and start repaying what you owe.

DCP (Debt Consolidation Plan): For anyone owing debts to several financial institutions, a Debt Consolidation Plan may be helpful. A DCP can combine all of your unsecured debts across all institutions into one debt with a single institution. This means you need only liaise with one institution, which can make managing and paying off your debt simpler.

VA (Voluntary Arrangement): this is in effect a formal agreement between you and your creditors to repay what you owe, while a nominee supervises you. A nominee must be:

• A lawyer
• A registered public accountant, or
• A consenting person who is gazetted by the Minster for Law.

The advantage of a VA over bankruptcy is that you are not restricted in the same way a bankruptcy order restricts you—you can, for example, still travel abroad.

Anyone wanting to seek a VA should apply to the court for an interim order, to suspend the bankruptcy proceedings against you.

Once the court grants the interim order, you should declare all your assets and liabilities and make a proposal showing how you plan to repay your creditors’ debts.

If your creditors accept the VA, then it will be implemented and you can then start to pay your debts, following the proposal you submitted.

Conclusion

Bankruptcy is a serious matter, but the best way to get out of it is to commit to repayment of your debt in a realistic and managed way. Make sure you understand how bankruptcy works, so that you can better manage your options, rather than worrying about uncertainties. Don’t ignore letters from creditors or documents from the court which demand payment—you can still be made bankrupt even if you ignore the letters. We would highly recommend that you seek professional advice from a dedicated bankruptcy lawyer should you have questions or an urgent need for help.