Will I lose all my assets?
Last year, almost 400 women in Singapore received Bankruptcy Orders – 145 of whom were aged between 41 and 50. Low income or overspending were the most common reasons cited when they filed for insolvency, although some chalked it up to business failure, speculation or gambling, and unemployment or liability as a guarantor.
What is bankruptcy?
It is a legal status declared by the High Court when an individual cannot repay debts of $10,000 or more – this may be raised to $15,000 if changes proposed recently by the Ministry of Law are passed. You can file for bankruptcy or your creditor, such as your bank, may apply to the High Court to issue a Bankruptcy Order against you.
If you’ve been officially declared bankrupt, an Official Assignee will be tasked to sort out your financial affairs. The first thing you have to do is fill out a Statement of Affairs form within 21 days from the day your Bankruptcy Order was made. This includes your personal details, assets and liabilities, even your children’s income (if any). If you gave away or sold any assets within the last five years before your Bankruptcy Order was made, details on the estimated worth must also be provided.
Your Official Assignee will help
you sort out how to clear your debt, which usually involves selling off your assets, registering your creditors’ claims and distributing your dividends to your creditors.
Be careful not to omit any details or provide false information in your statement or you could face a fine of up to $10,000 and/or up to two years’ jail. Anything valuable that you own before the Bankruptcy Order was issued and anything you bought or that was gifted to you before you are discharged from bankruptcy must be surrendered to the Official Assignee. This includes all local and foreign properties and bank accounts, securities, beneficial interest (benefits on assets owned by another party, like if you were the beneficiary of a trust fund), vehicles, insurance policies, safe deposit box contents and even telecommunications equipment purchased under your name.
However, there are some assets that are protected from your creditors, like a private property held in trust for someone else, which means it doesn’t belong to you. Items deemed “necessary and not extravagant”, such as furniture and personal effects like clothes and shoes, can also be kept, as can trade tools that you’ll need to make a living and pay off your debt. You also get to keep your HDB flat if at least one of the owners is a Singaporean, your Central Provident Fund (CPF) accounts’ monies, and any life insurance policies where your spouse or children are named beneficiaries. Also safe are compensation for personal injury or wrongful act suits.
But any payout under the Dependants’ Protection Scheme will go towards paying off your creditors, unless you’re the one insured and the compensation is for your permanent incapacity, meaning you do not have the physical or mental capacity to be employed. Even then, CPF or the private insurer will need to seek the Official Assignee’s consent before releasing any funds to you.
If you have any secured asset – any asset put up as collateral with the bank when you take up a loan, such as your property or car – the bank gets first dibs to sell it off and recover what you owe them. Anything in excess of that goes back to the Official Assignee to pay off other creditors.
If a Bankruptcy Order has been made against me, do I still have to repay my debt?
Yes. In the Statement of Affairs form, you’ll need to declare how much you can repay every month, and any lumpsum repayments you make. If you are unemployed and can’t repay your debt, you will need to provide proof in the form of a letter of termination,