fbpx

Life As a Bankrupt: After a Bankruptcy Order in Singapore

What happens after Bankruptcy Order is made?

Once you are declared a bankrupt, your assets will form part of your bankruptcy estate and be controlled and managed by the Official Assignee (“OA“). The OA’s role is three-fold:

  • to oversee the bankruptcy estate – e.g. by planning the monthly contributions to be paid, by selling your assets to pay off the creditors.
  • to manage your affairs – e.g. assessing your application to travel overseas or to defend or commence a court action
  • to assist you in obtaining a discharge from bankruptcy.

What happens to your assets?

Your assets will form part of your bankruptcy estate, and creditors who have provided proof of their debts can then receive dividends from your bankruptcy estate. 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, will also be remitted to the bankruptcy estate. However, if there are any secured creditors over your assets, the secured debt will not be part of the bankruptcy estate. The secured creditors are entitled to exercise their rights under their securities.

Please also be aware that the OA deducts a fee from the proceeds of assets realised or deposits that are placed into your bankruptcy estate.

Protected Assets

This does not mean everything is lost. The following is a list of property that are protected from distribution to creditors and therefore specifically excluded from the bankruptcy estate:

  • property held by the bankrupt on trust for any other person;
  • the bankrupt’s HDB flat (if at least one flat owner is a Singapore citizen);
  • monies in the bankrupt’s CPF account;
  • life insurance policies held in express trust for your spouse or children;
  • any items of equipment required for the bankrupt’s personal use in the bankrupt’s employment, business or vocation;
  • equipment, clothing, bedding furniture and provisions required for the bankrupt’s family’s needs;
  • the remainder of the bankrupt’s monthly income after deduction of the monthly contribution; and
  • any annual bonus or annual wage supplement paid as part of the bankrupt’s income.
Speak to a lawyer now

CONTACT US TODAY

Our specialised lawyers and their team are standing by to assist you. Our first consultation is free.

Bankruptcy Registery

The names of bankrupts are listed in Singapore’s bankruptcy register. This register can be searched by anyone, including current and future employers. This also means banks and financial institutions will be able to search the register when deciding whether to extend credit to you. However, depending on how you get out of bankruptcy, your name may be removed from the register after a certain period of time. 

Responsibilities and Restrictions on a Bankrupt

Once you are declared as a bankrupt, your responsibilities will include numerous disclosure requirements such as:

  • disclosing to the OA all your assets;
  • disclosing to the OA all of the property that you disposed of prior to the bankruptcy or property disposed of by way of a gift or settlement within the 5 years preceding this bankruptcy;
  • making monthly contributions to the bankruptcy estate;
  • keep the OA informed of your place of residence and contact details – any change in residential address should be promptly reported to the OA;
  • ensure letters from the OA to you are answered promptly and that you attend at the OA’s office whenever required and the Income and Expenditure Statements required by the OA are provided on time.

As an undischarged bankrupt, there are several restrictions placed on you that you cannot do. These restrictions include:

  • leaving Singapore without the OA’s permission;
  • bringing any legal action against another person unless the OA gives permission, except on the grounds of personal injury suffered by yourself or divorce;
  • acting as a trustee of personal representative without the Court’s permission;
  • participating in the management of a business or acts as the director of a company without the permission of the OA or the High Court;
  • cannot borrow more than $1,000 without informing the lender that you are a bankrupt

Categorisation of Bankrupts

Bankrupts are categorised during bankruptcy to streamline case management. Therefore, bankrupts are categorised into the Green Zone and the Red Zone depending on their conduct during bankruptcy. Being in the Green Zone includes advantages such as having an easier time obtaining permission to travel, expeditious processing of the bankrupt’s application to run a business or act as a director, and being assessed for suitability for discharge from bankruptcy after 5 years in bankruptcy. Some factors that the OA may take into account when deciding whether to place a bankrupt in the Green Zone include:

  • Statement of Affairs filed on time;
  • Bankrupt is gainfully employed;
  • Instalment payments are regularly made;
  • Full disclosure of local and overseas assets;
  • Co-operative with OA.

However, a bankrupt who has been categorised in the Red Zone can, if he or she makes an effort to demonstrate good conduct during bankruptcy, be re-categorised into the Green Zone.

How We can help

Although bankruptcy will inevitably result in great disruption to your regular lifestyle, there are ways to mitigate the disruption. Please get in touch with us to explore your options and what you can do to ease the pressure of bankruptcy on your everyday life.

Contact Us today to schedule a free consultation where we can advise you on your situation and provide you with solutions.

Speak to a lawyer now

CONTACT US TODAY

Our specialised lawyers and their team are standing by to assist you. Our first consultation is free.

The information contained within this website contains general information about our lawyers, Law Firm and procedures and is not intended to constitute legal advice.
Any person viewing or receiving information from this Website should not act or refrain from acting, on the basis of any such information without first seeking appropriate legal advice.
Please consult a lawyer for specific review of your case and advise. 

Like this article?

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Leave a comment

Start a Conversation

Hi! Click one of our member below to chat on Whatsapp

Joint Managing Partner

Joint Managing Partner

Enquiry from Emerald Law

online

Joint Managing Partner

Joint Managing Partner

Enquiry from Emerald Law

online

Scroll to Top

Speak to a Lawyer Now

Did you forget to claim your free consultation?

Click now to claim your free consultation.