In Singapore's fast-paced economy, financial challenges can arise unexpectedly. Personal bankruptcy is a legal process that provides relief to individuals unable to meet their debt obligations. Understanding the intricacies of bankruptcy in Singapore can help individuals make informed decisions during financial distress.
What Is Personal Bankruptcy in Singapore?
Bankruptcy in Singapore is governed by the Insolvency, Restructuring and Dissolution Act 2018 (IRDA). An individual may be declared bankrupt if they owe at least S$15,000 and are unable to repay. Creditors can file a bankruptcy application against the debtor, or the debtor can file a debtor’s bankruptcy application voluntarily.
Consequences of Bankruptcy
Restrictions on Activities: Bankrupt individuals face restrictions on employment, travel, and holding certain positions, such as company director roles.
Asset Distribution: The Official Assignee (OA) manages the debtor's assets to repay creditors, which may include selling properties and other valuables.
Credit Standing: Bankruptcy affects credit ratings, making future borrowing challenging.
Discharge from Bankruptcy
A bankrupt individual can be discharged through:
Certificate of Discharge: Issued by the OA upon meeting repayment obligations.
Court Order: Application to the court for discharge, subject to terms set by the court.
Completion of Debt Repayment Scheme (DRS): For those eligible, the DRS allows for repayment without being declared bankrupt.
Alternatives to Bankruptcy
Debt Repayment Scheme (DRS): For debts below S$150,000, individuals may enter into a repayment plan over a fixed period.
Voluntary Arrangements (VA): A formal agreement with creditors to repay debts, which must be approved by the court.
Conclusion
Bankruptcy is a serious legal status with significant implications. Individuals facing financial difficulties should seek legal advice to explore all available options, including debt restructuring or repayment schemes, to mitigate the impact on their lives.
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