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What to consider before your bankruptcy case

A debtor is a party who owes a sum of money to another party, called the creditor.

As a debtor, you may apply to make yourself a bankrupt, or your creditors may apply to make you a bankrupt.

In either case, you should consider what it means to be a bankrupt and the alternative options.

Duties as a bankrupt

If a bankruptcy order is made against you, you will have to fulfil duties as a bankrupt. Examples include:

  • Having a court-appointed trustee (the Official Assignee or private trustee) manage your property and finances. As part of managing your financial affairs, the trustee may sell your assets and distribute the proceeds to your creditors to assist with your debt settlement.
  • Contributing part of your income to a bankruptcy estate, which the trustee will use to repay your creditors.

Refer to Section 399(1) of the Insolvency, Restructuring and Dissolution Act for more information.

There is no automatic way to get out of bankruptcy. You will have to take steps to repay your debt or apply to be discharged as a bankrupt.

Restrictions as a bankrupt

If you are a bankrupt, you may face restrictions related to:

Traveling overseas

You can only leave Singapore if you get the trustee's prior permission.

Managing a business or acting as a director of a company

You cannot manage a business or act as a director of a company, unless with the permission of the court or the written permission of the Official Assignee.

Obtaining credit

You must disclose your bankruptcy status to the lender if you are applying for a credit or loan of at least S$1,000.

Starting and continuing court actions

You cannot start or continue court actions without the trustee's prior approval. This excludes any of the following:

  • An action for damages in respect of any injury to the bankrupt, and any appeal arising from the action.
  • A matrimonial proceeding, and any appeal arising from this action. (1)

Being a trustee or personal representative

You are disqualified from being appointed or acting as a trustee or personal representative in respect of any trust, estate or settlement unless you obtain the General Division of the High Court's permission to do so.

Read more about the duties and responsibilities of a bankrupt on the Ministry of Law's website.

Alternatives to bankruptcy

You can try different ways to repay your debts without being declared a bankrupt. Examples include:

Private arrangement

If you are unable to repay the entire debt, you may try to negotiate with your creditors to reach an agreement, such as paying your debts in instalments or in scheduled repayments. You can try to request for an extension of time to sell your assets to repay your debt.

You should inform your creditors of your latest financial position, and provide information and evidence to prove that. This agreement does not involve the court.

If you need advice on the repayment plan, you can approach Credit Counselling Singapore, a non-profit organisation that offers support for debtors.

Debt Repayment Scheme

During a bankruptcy hearing, the court will consider whether you qualify for the Debt Repayment Scheme (DRS).

This is a pre-bankruptcy scheme by the Official Assignee. It aims to help eligible debtors with debts not more than $150,000 avoid bankruptcy through a debt repayment plan.

You cannot sign up or apply for the DRS. It is only initiated when there is a bankruptcy application against you in the General Division of the High Court, filed by either yourself or your creditor.

Criteria for the Debt Repayment Scheme

As the debtor, you must satisfy all these criteria:

  • Your debts do not exceed $150,000.
  • You are not an undischarged bankrupt and have not been a bankrupt within the last 5 years.
  • A voluntary arrangement involving you is not in effect, and was not in effect within the last 5 years.
  • You are not subject to any existing DRS, and have not been subject to any such scheme within the last 5 years.
  • You are not a sole proprietor, a partner of a firm or a partner in a limited liability partnership.

If you satisfy all these criteria, the court may adjourn the hearing for the Official Assignee to assess if you are suitable for the DRS.

After the Official Assignee's assessment

If you are found to be suitable, the DRS will start. The court will treat the bankruptcy application as withdrawn. You will have to fulfil your duties as a debtor under the DRS.

If you are found to be unsuitable, the court will schedule another hearing for the bankruptcy application. You may be declared bankrupt at that hearing.

Note: The DRS is administered by the Official Assignee, who is assisted by the Ministry of Law's Insolvency Office. Find out more about the DRS on the Ministry of Law's website.

Find out more

Need help?

The information here is for general guidance as the courts do not provide legal advice. If you need further help, you may want to get independent legal advice.

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Related questions

No, you must file a bankruptcy application to initiate the process. The court will only consider whether your case qualifies for the Debt Repayment Scheme during the hearing of the bankruptcy application.

You should approach your bank for clarification as to why it has done that. You may also wish to clarify whether you agreed in the past that your bank may take such measures if a bankruptcy application is filed against you.

Go to Step-by-step guide

Step-by-step guide


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