Look into rise in bankruptcy applications this year: Forum

As a licensed insolvency practitioner and one who acts as a private trustee for numerous bankruptcy matters, I would like to respond to Mr Raymond Lim’s letter “Offer bankrupts dignity and real chances for recovery” (Dec 18).

There is no doubt that bankruptcy is a difficult journey as this will last between three and seven years for a first-time bankrupt.

Bankruptcy comes with many inconveniences, such as being allowed to have only one bank account, and having travel restrictions unless approval is obtained from the Official Assignee or the Private Trustee. Given the existing financial difficulties, travelling overseas for leisure would be a privilege and not be taken for granted.

However, it is untrue that children of bankrupts cannot open bank accounts.

On Aug 1, 2016, bankruptcy laws were amended to provide fixed exit points (three to seven years) for bankrupts to be discharged, to give them an incentive to cooperate with the trustee and adhere to payment plans to be discharged even earlier after the third year.

This is to strike a balance between rehabilitating the debtor and compensating the creditors who lost significant amounts due to the debtors’ non-repayment.

There is no reason why discharge should take more than eight months unless the bankrupt has not fulfilled all the conditions to be discharged, such as fulfilling the monthly/total contribution or cooperating with the trustee in realising pre-bankruptcy assets.

Disclosure of bankruptcy status is required in various employment and entrepreneurial opportunities, and is to protect the interest of parties who may wish to contract with the bankrupt and to avoid further financial issues with the bankrupt during bankruptcy.

Certainly, given the tight labour market in Singapore, there are still employment opportunities for bankrupts, and enlightened employers will look beyond the bankruptcy to consider the candidate’s suitability.

What is more concerning is the significant rise in bankruptcy applications in 2024, which was 4,521 as at end-November, and this may be very close to, or exceed, 5,000 by the year end.

The last time bankruptcy applications hit 5,000 was in 2003 and 2004, about 20 years ago. 

Perhaps the focus should be on finding out the root causes and looking into preventive measures to reduce or prevent bankruptcies. 

Ong Shyue Wen

Offer bankrupts dignity and real chances for recovery: Forum

Bankruptcy in Singapore is a difficult journey.

The struggles extend beyond finances, affecting entire families. For children of bankrupt parents, even opening savings accounts is impossible. They face peer pressure when friends go on holidays, while their parents cannot travel overseas.

For bankrupt working adults, travel for business is complicated as phone roaming services are locked by telcos, leaving them vulnerable in emergencies.

While bankrupts can request early discharge after 36 months if target contributions are met, this is not a smooth process. Although discharges are supposed to take eight months, many people wait over five years without updates.

Job applications add to the challenges. Many employers require applicants to declare their bankruptcy status, visible to anyone handling the forms, inviting stigma and gossip. For lower-level roles like technicians, this disclosure seems unnecessary. Companies could rely on credit bureaus for high-level roles instead of worsening the embarrassment for bankrupts.

Even volunteer work isn’t spared. In some large organisations, a bankrupt holding a key position must undergo an interview and resign from leadership roles before continuing as a volunteer in a non-leadership capacity. This raises the question: Should bankrupts stop volunteering to avoid judgmental glances, or endure societal prejudice to contribute?

Bankrupts also face limited entrepreneurial opportunities. They cannot even apply for a hawker stall licence, blocking honest attempts to rebuild their lives. While ex-offenders receive second chances through initiatives like the Yellow Ribbon Project, bankrupts are left with little support, deepening their despair.

Each bankruptcy has a unique story, often stemming from circumstances beyond one’s control. Singapore must rethink how it treats bankrupts, offering dignity and real chances for recovery.

Raymond Lim

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

ADV: Singapore International Commercial Court Conference 2025 Bloomberg issued Pofma order over article on good class bungalow transactions in S’pore