Process of Filing for Bankruptcy in Singapore & What’s Next?

Last updated on April 24, 2024

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How Does Bankruptcy Work?

A debtor can voluntarily file for bankruptcy in Singapore if they owe and cannot repay debts of at least S$15,000. Alternatively, the debtor’s creditors can also file to make the debtor bankrupt if they don’t think the debtor can repay the debts owed to them.

If the debtor is declared bankrupt, their assets will be sold and the proceeds put into a bankruptcy estate. This excludes any assets that are protected from bankruptcy, such as HDB flats.

The bankruptcy estate is typically managed by the Official Assignee (OA). The OA is an officer assigned by the court to administer the debtor’s assets and distribute them as fairly as possible among the creditors (more on the role of an OA below). Alternatively, the bankruptcy estate can be managed by a private trustee, who can be an accountant or lawyer.

Bankrupts who are gainfully employed will have to make a monthly contribution that is paid into their bankruptcy estate. The monthly contributions go towards fulfilling a target contribution that is decided by the Official Assignee. The property in the bankruptcy estate cannot be used to pay off the target contribution.

If the target contribution is paid off, the bankrupt can be discharged from bankruptcy.

Why File for Bankruptcy?

The short answer is: you should file for bankruptcy when:

  • There is a low likelihood of paying your debts in full; and
  • It is not possible to make alternative private arrangements with the creditors, to repay the debt.

In such scenarios, bankruptcy may be a preferable option as:

1. Your debt stops accumulating

After the making of the Bankruptcy Order (an order issued by the High Court declaring your status as a bankrupt), the creditor cannot charge interest for the principal sum owed.

Thus, the debt is “frozen” at a certain amount.

2. Your monthly repayments are lower

Previously, your creditors may have been chasing you for monthly repayments that were way out of your means. If you are declared a bankrupt, the OA will decide a suitable amount of monthly contribution that you will have to make after taking into account what you need for yourself and your family.

This would mean that the monthly contribution amount will likely be more reasonable and within your means compared to the previous sums that your creditors were hounding you for every month.

3. Creditors cannot sue you for debts

Creditors are barred from commencing legal proceedings against you to recover debts incurred before bankruptcy, after the making of the Bankruptcy Order.

Should you file for bankruptcy yourself or wait for a creditor to do so?

It may be preferable for you to self-declare bankruptcy yourself instead of waiting for a creditor to sue you. This is because as you wait, the interest on your debts may continue snowballing in the meantime.

Furthermore, no matter who files for bankruptcy, the cost of the bankruptcy application deposit will likely be borne by you as the debtor. More information on the costs of filing for bankruptcy can be found below.

Requirements to File for Bankruptcy

A creditor (or the debtor themselves) can file to have the debtor declared bankrupt if the debtor falls within one of the following situations:

  • Is domiciled in Singapore
  • Has property in Singapore
  • Has been ordinarily resident in Singapore for at least 1 year
  • Has had a place of residence in Singapore for at least 1 year
  • Has carried on business in Singapore for at least 1 year

In addition, the debtor must owe at least $15,000, where the debt is payable immediately and enforceable in Singapore, but the debtor is unable to pay the debt.

Singapore Permanent Residents who meet the above conditions may also file for bankruptcy in Singapore. For more information, refer to our other article on bankruptcy filing FAQs for Singapore Permanent Residents.

If it is a creditor that has made the bankruptcy application, the debtor will be regarded as being unable to pay the debt if one of the following is satisfied:

  • The debtor has failed to comply with a statutory demand to pay the debt for at least 21 days
  • The debtor failed to comply with a court-issued execution to pay the debt
  • The debtor has fled the country to avoid repayment
  • The OA certifies that the debtor is unable to pay the debt

How to File for Bankruptcy

There are 6 key steps to file for bankruptcy in Singapore.

Step 1 You have to obtain and complete the relevant forms for the:

  • Debtor’s Bankruptcy Application;
  • Affidavit in Support of Debtor’s Bankruptcy Application;
  • Statement of Affairs (a statement containing information such as your assets, liabilities, current employment status and monthly expenses); and
  • Affidavit Verifying Statement of Affairs.

Note: You must swear or affirm both affidavits before a Commissioner for Oaths (CFO).

Step 2 Place a bankruptcy deposit of $1,850. Payment can be made here upon which the OA will issue you a receipt.
Step 3 Obtain the written unqualified consent of a licensed insolvency practitioner (IP) stating that the licensed insolvency practitioner consents to act as the private trustee in bankruptcy (PTIB). In particular, you must obtain the:

  • Licensed insolvency practitioner’s written consent.
  • Copy of licensed insolvency practitioner’s licence granted under section 53 of the Insolvency, Restructuring and Dissolution Act 2018.

Note: Your case will be handled by private trustees in bankruptcy except where the OA considers that there is public interest and consents to be appointed as the trustee in bankruptcy.

Step 4 Bring the completed documents (from Step 1), the receipt (from Step 2) and the written consent/licence (from Step 3) to the CrimsonLogic Service
Bureau (CLSB) at the Supreme Court to file your bankruptcy application.
Step 5 Return to the CLSB to collect a copy of the application documents that have been endorsed by the court when you receive the email or SMS notification from the CLSB.

This will include the date and time of a hearing that you must attend. If you missed the hearing, your application may be adjourned to a later hearing date or dismissed by the court. If the application is dismissed and you still wish to make yourself a bankrupt, you will have to file a fresh application and pay the fees again.

Step 6 Serve a copy of the bankruptcy application documents on the OA and give written notice of the bankruptcy application to the nominated licenced IP.

Note: Except for the Statement of Affairs (which can be handwritten), all forms must be typed.

If the application succeeds, a Bankruptcy Order will be made to you, by the High Court.

Alternatively, the court may adjourn the hearing for a Debt Repayment Assessment and consider whether you qualify for a Debt Repayment Scheme (see below).

Costs of Filing 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, as mentioned above.

For successful bankruptcy applications filed by a creditor, that creditor can recover the full amount of the deposit if there are enough funds in the bankrupt’s estate. For successful bankruptcy applications filed by the debtor, however, the deposit of $1,850 will not be returned.

For bankruptcy applications that have been dismissed or withdrawn, the OA will refund $1,800 to the applicant (be it the creditor or the debtor) while the remaining $50 is retained as preliminary administration costs.

If you hire a lawyer to help you file for bankruptcy, the lawyer will charge their professional fees on top of the deposit amount.

Do note that the following additional fees may apply:

  • Commissioning fees may be chargeable by either your lawyers or the Supreme court’s CFO (step 1)
  • A deposit may be required by the licensed IP (step 3)
  • CLSB filing fees (step 4)

What Happens After I Have Been Declared Bankrupt?

Within 21 days of the Bankruptcy Order, you will be required to head down to the OA’s office to be briefed on your responsibilities as a bankrupt, as well as to submit a Statement of Affairs recording your assets and liabilities to the OA.

If your case is handled by the PTIB, you must similarly submit your Statement of Affairs to the trustee within 21 days of the Bankruptcy Order.

After which, you will begin discussing your monthly contribution plan with the OA/trustee.

Role of an OA/trustee

In essence, the OA/trustee’s role is largely three-fold:

  1. To oversee the bankruptcy estate. For example, by planning the monthly contributions to be paid, by selling your liquid assets to pay off the creditors and importantly, to determine what the target contribution is.
  2. To manage your affairs. For example, by assessing your applications to travel overseas or advising you on opening a bank account and other matters relating to bankruptcy administration.
  3. To ensure you fulfil your responsibilities as a bankrupt (see below).

What happens to your assets?

Once you are declared a bankrupt, your assets will form part of your bankruptcy estate and be controlled and managed by the OA/trustee. For example, the OA/trustee may sell your assets and distribute the proceeds to your creditors to assist with your debt settlement.

Assets that can form part of your bankruptcy estate can include:

  • Anything of value belonging to you at the date of or after the making of the Bankruptcy Order (including overseas assets like property); and
  • Gifts given to you prior to your discharge from bankruptcy.

Any proceeds obtained from the sale of your assets, excluding the value of the secured debt, will also be remitted to the bankruptcy estate.

However, some assets are considered protected assets and will be excluded from the bankruptcy estate (and hence protected from distribution to creditors). These include:

  • Property held by you as a trustee for someone else;
  • Your HDB flat (if at least one flat owner is a Singapore citizen);
  • Monies in your CPF account;
  • Life insurance policies held on express trust for your spouse or children;
  • Any items/equipment required for the personal use in your employment, business or vocation;
  • Equipment/furniture required for your family’s needs;
  • The remainder of your monthly income after deduction of the monthly contribution; and
  • Any annual bonus or annual wage supplement paid as part of your income
  • Compensation awarded for legal action in respect of personal injuries or wrongful acts against you.

Assets that were previously used to secure your loans to creditors, and that do not belong to the category of protected assets above, can be sold by the creditors if you default on your monthly contributions.

Your name will go into the bankruptcy register

The names of bankrupts are listed in Singapore’s bankruptcy register. This register can be freely searched not just by current and future employers, but also by the general public, with the payment of a fee. However, depending on how you get out of bankruptcy, it is possible to have your name removed from the bankruptcy register after a certain period of time.

Will your family have to help repay your debts?

Your family will only be liable for your debts if they are co-borrowers of the debt with you. For example, this can happen if:

  • You took out a home mortgage in both your and your spouse’s names
  • You took out a hire-purchase loan for a car in both your and your sibling’s names
  • You borrowed money using a supplementary credit card that is tied to your parent’s name

Family members who are guarantors for your loan can also be made bankrupt if they are unable to repay it.

If you and your spouse live in an HDB flat, you should inform HDB about your financial situation so that HDB will not take legal action against you for any outstanding payments to them. HDB can also help draw up a temporary payment plan with reduced instalments to ease your current financial burden.

Will you be able to work?

Yes, you will be able to work as per normal even after being declared a bankrupt.

Are you able to undergo divorce proceedings?

Yes, even if you are a bankrupt, you can still file for divorce. Your spouse can also still file for divorce against you. For more information, read our article on how bankruptcy affects divorce proceedings.

Responsibilities of and Restrictions on a Bankrupt

Once you are declared as a bankrupt, your responsibilities will include:

  • Producing documents of and delivering all of your property under your possession or control to the OA/trustee
  • Attending before the trustee/OA to answer questions with respect to your affairs, dealings, property and the causes of your bankruptcy
  • Making monthly contributions to the bankruptcy estate
  • Attending any meeting of your creditors unless prevented by sickness or other sufficient cause

There will also be several restrictions imposed on you that you will have to comply with. Importantly, a bankrupt cannot:

  • Be appointed as a trustee or personal representative in respect of any trust or estate, unless the court approves;
  • Commence legal action against another person, except on the grounds of personal injury suffered by yourself or divorce, unless the OA gives permission;
  • Leave Singapore without the trustee’s permission;
  • Borrow more than $1,000 without informing the lender that you are a bankrupt;
  • Participate in the management of a business or act as the director of a company without the permission of the OA or the High Court.

For more information, please read our article on what a bankrupt can or cannot do in Singapore.

Green Zone and Red Zone: Categorisation of bankrupts and the associated privileges or lack thereof (This section is only applicable for bankruptcy applications filed before 1 August 2016)

Despite the restrictions placed on bankrupts, they may be afforded or withheld certain further privileges depending on whether they have been categorised to be in the Green Zone or Red Zone.

Bankrupts who display satisfactory conduct during bankruptcy are generally placed in the Green Zone. They also get more privileges such as:

  • Being granted a travel permit of more than a month to any country
  • Being assessed as suitable for discharge from bankruptcy

On the other hand, bankrupts who display unsatisfactory conduct during bankruptcy are generally placed in the Red Zone. They may have certain privileges withheld, such as:

  • Not being allowed to travel
  • Not being given permission to manage a business or act as a director
  • Being assessed as unsuitable for discharge from bankruptcy

The following table shows some factors that the OA may take into account when deciding whether to place a bankrupt in the Green Zone or Red Zone:

Green Zone Red Zone
Statement of Affairs was filed on time Statement of Affairs was not filed on time
Bankrupt is gainfully employed Bankrupt is unemployed and has no good reason for being unemployed
Instalment payments are regularly made Instalment payments are irregular or not made at all
Full disclosure of local and overseas assets Non-disclosure of local and overseas assets
Cooperative with OA Uncooperative with OA

What Happens to My Assets and Debts Should I Pass Away?

Should you pass away, your estate (this is different from the bankruptcy estate – it refers to all the assets that you have at the time of death) will be administered in the following manner:

  • Subject to the funeral, testamentary and administration expenses having priority
  • The OA will continue managing the bankruptcy estate to pay off your debts to the creditors. In other words, your death does not mean that your debt will be automatically discharged.

For more information, please refer to our article on what happens to your debts when you die.

How Do I Get Out of Bankruptcy?

Generally, there are 4 methods to get out of bankruptcy:

  1. Annulment by the High Court: The General Division of the High Court may annul a bankruptcy order;
  2. Annulment by the OA: If it appears to the OA that the debts and expenses of the bankruptcy have all been paid since the making of the bankruptcy order. Alternatively, the bankrupt may propose a composition in satisfaction of the debts. If the composition is accepted by all creditors, the OA may annul the bankruptcy order by issuing a certificate of annulment;
  3. Discharge by the High Court: Applying to the court for an order of discharge;
  4. Discharge by the OA: By fully paying off your target contribution (or being unable to do so due to certain extenuating circumstances)

Depending on which method is used, it is also possible to have your name removed from the bankruptcy register after that.

For more information on these 4 methods, please refer to our article on getting out of bankruptcy.

What are Some Alternatives to Filing For Bankruptcy?

Debt Repayment Scheme (DRS)

Nonetheless, filing for bankruptcy may not be the be-all and end-all.

If you have a regular income and owe debts not exceeding S$150,000 (subject to other conditions as well), the court may refer you to the Debt Repayment Scheme (DRS) upon the bankruptcy application.

The DRS is a pre-bankruptcy alternative that allows you to avoid declaring bankrupt and repay your debts.

Voluntary Arrangement (VA)

Apart from the DRS, another alternative is to arrange for a Voluntary Arrangement (VA).

A VA is essentially a formal arrangement between you and your creditors to repay the debt, with the supervision by a nominee. The nominee must be a:

  • Registered public accountant;
  • A lawyer; or
  • A person gazetted by the Minister for Law who has consented to being appointed.

On this note, the main reason why a VA is more advantageous than filing for bankruptcy is that it does not come with the restrictions that a bankruptcy order would impose on you. For example, the restrictions on overseas travel.

If you intend to pursue VA as an alternative, you may apply for an interim order to the court to suspend all bankruptcy proceedings against you.

After the interim order is granted by the court, you must disclose all assets and liabilities and make a proposal on how you intend to settle the debts with the creditors.

If the VA is accepted by the creditors during the creditors’ meeting, the VA will be successfully implemented and you will be able to begin repaying the debts as per the approved proposal.

Debt Consolidation Plan (DCP)

If you owe separate debts to multiple financial institutions, you may find it worthwhile to undergo a Debt Consolidation Plan (DCP).

Under the DCP, all your unsecured debt across all financial institutions will be combined into a single debt with a single financial institution. This way, you have to liaise with only one financial institution, which may make tracking and paying off your outstanding debt more manageable.

Learn more about the Debt Conslidation Plan in our other article.

All in all, notwithstanding the disadvantages of bankruptcy, commitment towards repayment of the debt will go a long way.

Learning more about bankruptcy proceedings is important as you will better understand how to manage your options in financially difficult times, as opposed to dealing with unknowns and uncertainties.

You also should refrain from ignoring creditors’ letters or court documents requesting for payment as you may still be made a bankrupt even if you do not respond to these documents.

If you require advice on bankruptcy proceedings or related matters, it is recommended that you seek legal advice from a bankruptcy lawyer.