Alternatives for Filing Bankruptcy in Singapore

In Singapore, declaring bankruptcy can cause emotions of worry, anxiety, melancholy, and failure. Let’s face it: filing for bankruptcy is a time-consuming procedure, not to mention the social stigma that comes with it.

So, before deciding to file for bankruptcy, why not investigate other more desired options while avoiding the drawbacks and limits of bankruptcy?

When Should You File for Bankruptcy In Singapore?

When you owe more money than you can pay back, you file for bankruptcy. In Singapore, you can declare bankruptcy if you meet the following criteria:

  • You have debts totaling at least S$15,000 that you are unable to repay. (New temporary measures have been adopted as a result of COVID-19, and the sum has been increased to S$60,000 until October 19, 2020.)
  • There are no other options for repaying your loan in the private sector.

In these circumstances, it’s fairly unusual to contemplate filing for bankruptcy. Apart from the societal shame and pressure, there are a few reasons why you might want to keep that concept in your head.

Reasons to Avoid Filing For Bankruptcy In Singapore

Filing for bankruptcy in Singapore can have a variety of implications, ranging from harmed career opportunities to problems obtaining future loans.

1. You’ll need to apply for permission to Travel.

Only with the consent of the Official Assignee will you be permitted to depart Singapore. If you must leave the nation, you must submit an application 14 days before your departure. If it’s regarded unneeded, it’ll almost certainly be denied. That implies there’s no guarantee you’ll be allowed to travel for pleasure.

2. Your Way of Life Will Be Examined

You’ll have to reveal your monthly financial statistics, including how much you spend on yourself and your family. The Official Assignee will then calculate how much money you’re entitled to for day-to-day costs. He or she will keep track of your expenses, so you may have to forego even simple indulgences.

3. Loans will be difficult to come by.

Being bankrupt also affects your creditworthiness, which might last for several years even after you’ve been discharged from bankruptcy. As a result, your prospects of getting approved for any financing for that car or house in the next years would be slim. It’s also worth noting that receiving a loan for more than S$1,000 would most likely be tough.

4. In Singapore, bankruptcy is not automatically discharged.

There is no automatic discharge in Singapore. To be dismissed, you must either pay off all your obligations or file for an Order of Discharge. You might also present a proposal to your creditors on how you plan to repay your debt. Even if you are accepted, your name will only be removed from the bankruptcy registry five years after the discharge date.

5. Running a Business or being on a Board of Directors may not be a Possibility. 

You must first obtain approval from the High Court in order to start a business. You’ll also have to inform everyone with whom you conduct business that you’ve declared bankruptcy – even if it may not make a good first impression. Before you may accept a position as company management or director, you’ll need the approval of the Official Assignee.

6. There Will Be Fewer Job Opportunities for You

If you declare bankruptcy, you may have trouble getting jobs in the public sector and in the banking business, in particular. You might even lose your employment if you have a blemish on your record. Your present and potential employers, as well as the general public, can search this register for free. If you’re currently working, your employer will be aware of your status, which may affect your job chances.

Alternatives To Filing For Bankruptcy

1. Make a Deal With Your Lender

Approach your lender and reach a debt-resolution deal. There are three options available for you and your creditors, depending on factors such as the severity of the debt and how far your creditors have pursued you through legal means:

Arrangements made in private

You and your creditors can reach a private arrangement to settle your obligations without the participation of the High Court or the need to file for bankruptcy. You don’t want to waste time waiting for them to get back to you, so get in touch with them as soon as feasible. Request more time and a different method of resolving the debt. They will usually assist you in rearranging your payment arrangement.

Arrangement made voluntarily

When you petition the High Court for an interim order, it is referred to as a voluntary arrangement. You’ll have to reveal your assets and obligations, as well as a repayment plan. This is a legal debt repayment arrangement between you and your creditors. If your creditors approve the proposal and it’s implemented effectively, you will be able to repay your obligations.

Dispute Resolution in Court

Consider addressing the matter through judicial dispute settlement if your lenders have filed a civil lawsuit against you. You can negotiate a settlement of your debt payments throughout this phase. You’ll be able to escape bankruptcy this way.

2. Consider Credit Counselling

A credit counselor will assess your present financial status and provide recommendations. If it’s the best option for you, they may enroll you in a Debt Management Program (DMP). These credit counselors will assist in the creation of a repayment plan that all parties may agree on. They will also assist you in evaluating your finances on a monthly basis and determining how much should be set aside for your home or personal budget.

3. Make an application for a debt consolidation plan (DCP)

If you owe 12 times or more than your monthly wage and are unable to handle your debt, consider applying for a Debt Consolidation Plan. This arrangement allows you to consolidate all of your unsecured debt into a single account with a cooperating bank. This makes it simpler to pay off your debt because you’ll only have to make one payment every month.

But, what’s the difference between a Debt Management Program and a Debt Consolidation Plan?

Debt Consolidation Plan (DCP)

  • Interest rate: Lower than that of existing credit facilities.
  • Tenure: a maximum of ten years
  • Credit facility access: 1 revolving credit facility
  • Type of debt: Unsecured borrowing except for education or student loan, joint account, renovation loan, and medical loan
  • Amount of debt: Debt that surpasses 12 times a person’s monthly income.
  • Nationality: Singaporean citizen and Permanent Resident
  • Public Record: No

Debt Management Programme (DMP)

  • Interest rate: Lower than that of existing credit facilities.
  • Tenure: 5 to 10 years
  • Credit facility access: No
  • Type of debt: All unsecured borrowing
  • Amount of debt: Minimum: S$10,000 & above
  • Nationality: All nationalities
  • Public Record: No

Choosing one of these options may be more advantageous since it does not come with the restrictions, social shame, or pressure that bankruptcy entails. Every circumstance is unique, so you’ll have to come up with a solution that works best for you.

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