Declaring Bankruptcy in Singapore

What is bankruptcy in Singapore?

Bankruptcy might be the first thing you think of when you realize that you can’t keep up with your bills and debts. It might even be the right solution for you. But, before declaring bankruptcy, you should know your options, how the bankruptcy process works and how it will affect you and your family. So, let us help you decide whether you should file for bankruptcy by explaining what bankruptcy in Singapore is about.

In Singapore, a debtor can voluntarily file for bankruptcy if they owe and cannot repay debts of at least S$15,000. The debtor’s creditors can also make the debtor bankrupt by filing the bankruptcy papers in court.

If the debtor is declared bankrupt, their assets (except for their HDB flat) will be sold, and the proceeds put into a bankruptcy estate.

For most bankrupts, the bankruptcy estate is typically managed by the Official Assignee (OA). However, if the debt is extremely substantial, the creditors may appoint a private trustee in bankruptcy (PTIB), an accountant or lawyer, to manage the bankrupt.

Specialist Bankruptcy Services

At PKWA Law, we specialise in guiding individuals through self-filed bankruptcy with a proven track record

We act for clients who are saddled with debt and creditors and need bankruptcy protection.  Our clients benefit from our expert guidance and transparent, reasonable fees. We provide clear insights into the bankruptcy process in Singapore and help you decide if it’s the best option for your financial situation.

PKWA Law acted for the Nominee to successfully seek bankruptcy protection under the Bankruptcy Act for two directors of TT International Ltd, a company listed on the Main Board of the Singapore Exchange Securities Trading Limited. This allowed the directors to resolve and restructure their personal liabilities of about $51 million arising out of corporate guarantees they had executed in connection with its debts.

Why File for Bankruptcy?

You can voluntarily file for bankruptcy in Singapore if:

  • There is a low likelihood that you’re able to repay your debts in full.
  • You cannot agree with your creditors to repay the debt.

Once you are bankrupted, your debt is frozen, and the interest is frozen. You will be required to make a substantially lower monthly repayment to the Official Assignee. Creditors are not allowed to sue you. You will get tremendous respite and peace from the relentless pressure of trying to pay your debt every month.

Bankruptcy is designed to protect the debtor

Nowadays, bankruptcy is no longer viewed in a very negative light. On the contrary, being bankrupted is now seen as a sensible thing to do, especially if the debtor is desperate and has exhausted all avenues to repay his debt.

Bankruptcy is now viewed as a sensible thing to do because:

  • First, it stops your debts from accumulating by stopping further interest charges on your principal sum owed. This effectively freezes your debt.
  • It provides you with an alternative and more forgiving payment plan. This means payments are likely to be more manageable than before when you were likely struggling to pay month to month.
  • It protects you from being sued for your debts.

How many bankruptcies are there in Singapore?

Between 2016 and 2018, figures from the Law Ministry’s Insolvency Office website showed more than 1,600 bankruptcy orders were made annually. However, in 2019, Bankruptcy orders dropped more than 40 per cent to 965.

Pre-Covid-19, the law allows a debtor 21 days to pay up on a statutory demand for an amount of at least $15,000. However, due to the COVID-19 situation, the Singapore government has temporarily raised this threshold to S$60,000 until 30 September 2020. As a result, this law has expired, and the threshold for bankruptcy is now restored to $15,000.

How many undischarged bankrupts are there in Singapore?

As of Dec 31 2020, there were 10,269 undischarged bankrupts.

What are the requirements to file for bankruptcy?

You or your creditor can file for bankruptcy if the following requirements are met:

  • Your debt is at least $15,000, it is due immediately, and you cannot pay it.
  • You are domiciled in Singapore.
  • You have a property in Singapore.
  • You have been ordinarily resident in Singapore for at least 1 year.
  • You have had a place of residence in Singapore for at least 1 year.
  • You have carried on business in Singapore for at least 1 year.

How bankruptcy affects you

Here are some ways in which bankruptcy will affect you:

  • You cannot leave the country without the OA/PTIB’s permission.
  • You cannot hold public office.
  • You cannot be a company director without the approval of the OA.
  • You cannot Sue any party in court (except for personal injury or matrimonial proceedings) without the OA’s/PTIB’s approval.
  • Your Bankruptcy will be entered into Singapore’s bankruptcy register, which anyone can freely search.
  • You can continue to work, but not in high positions
  • Your Credit score will be affected

How much does it cost to file for Bankruptcy?

Any creditor or debtor who wishes to file for bankruptcy must pay a deposit of $1,850 to the OA to administer the debtor’s estate.
If you are filing for self bankruptcy, the deposit will not be refunded.

What happens after you have been declared bankrupt?

After the Bankruptcy Order is made, you will be required to go to the OA’s office. The OA will brief you on your responsibilities as a bankrupt. You will also be asked to submit a Statement of Affairs to the OA.

The OA will also discuss with you your monthly contribution plan.

What happens to your assets?

All your assets will vest in the OA, which means that you no longer own your assets, and they all belong to the OA now. Therefore, you cannot sell your assets or deal with them as though you still own them.

However, some assets are considered protected assets and will be excluded from the bankruptcy estate. The most significant protected asset is your HDB flat. It cannot be sold to pay off your debts.

Will you be able to work?

A bankrupt can continue to work. However, part of their wages will be deducted and paid to their bankruptcy estate.

However, a bankrupt is not allowed to manage a business or act as a company director unless the court or the OA has granted prior permission.

Responsibilities of a Bankrupt

Once you are declared bankrupt, you will have the following responsibilities:

  • First, make full and frank disclosure of all your assets to the OA.
  • Disclose all and property that you disposed of before the bankruptcy.
  • Making monthly contributions to the bankruptcy estate to pay off creditors.
  • Keeping the OA informed of your place of residence and contact details
  • Attending any meeting with the OA.

Restrictions on a bankrupt

The restrictions on bankruptcy include:

  • You cannot Commence legal action against another person, except on the grounds of personal injury suffered by yourself or divorce.
  • You cannot travel out of Singapore without the OA’s permission;
  • You cannot borrow more than $1,000 without informing the lender that you are bankrupt;
  • You cannot be a director of a company without the permission of the OA or the High Court.

What is the Green Zone and Red Zone?

Once bankrupt, you must co-operate fully with the Official Assignee. The OA will decide whether you go into the Green Zone or Red Zone. Getting into the Green Zone means that you have been cooperative and have paid your monthly instalments on time. This enables you to be granted travel out of Singapore and be assessed as a suitable candidate for a discharge from bankruptcy.

On the other hand, if you are placed in the Red Zone, you have not cooperated with the OA. As a result, you may not be permitted to travel, and your chances of getting discharged from bankruptcy will be diminished.

The job of the Official Assignee

Once an official Bankruptcy Order has been filed, you will meet with an Official Assignee (OA) whose job is to help you manage your affairs and distribute your assets and repayments to creditors as fairly as possible.

Specifically, the OA’s duties are three-fold:

  1. To oversee the bankruptcy estate, by planning the monthly contributions to be paid, by selling your liquid assets to pay off the creditors and importantly, to determine your target contribution (the amount you need to pay back, determined at the start of your bankruptcy after taking into consideration your circumstances).
  2. To manage your affairs, such as assessing your applications to travel overseas or defend or commence a court action.
  3. To assist you in obtaining a discharge from bankruptcy, which the OA can recommend in the face of satisfactory conduct and adherence to monthly contributions.

How do you get out of bankruptcy?

There is no automatic discharge from bankruptcy in Singapore. However, you may get out of bankruptcy in these three ways:

  1. Annulment of the Bankruptcy Order by full settlement or Offer of Composition or a Scheme of Arrangement;
  2. Discharge by the High Court; or
  3. Discharge by Certificate of the Official Assignee.

Alternatives to bankruptcy

There are 2 main options to filing for bankruptcy – making a Voluntary Arrangement with your creditors and having a Debt Repayment Scheme.

a.  Voluntary Arrangement

Debtors may apply to Court for an interim order for a Voluntary Arrangement (VA). The VA is a negotiated debt settlement under Part V of the Bankruptcy Act. The debtor discloses his assets and liabilities and proposes how to settle his debts with various creditors. If the proposal is accepted by the creditors and implemented successfully, it will benefit both the debtor and his creditors.

b.  Debt Repayment Scheme

The Debt Repayment Scheme (DRS) is a repayment scheme to assist debtors with a regular income and debts not exceeding $150,000 to avoid bankruptcy.

A bankruptcy application triggers the DRS. When such an application is made to the High Court and the debt owed does not exceed S$150,000, the High Court may refer the debtor to the Official Assignee to assess the debtor’s eligibility suitability to enter into the DRS. If the debtor satisfies the relevant criteria, an administrator will devise a repayment plan requiring regular debt repayments to the creditors over a fixed period of time.

Seek help from PKWA Law bankruptcy lawyers

Please do not hesitate to contact us if you require assistance on bankruptcy or bankruptcy protection.


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Low Jin Liang

Deputy Co-Head, Family & Divorce Practice Group

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