Bankruptcy Amendment Bill passed

The Bankruptcy Amendment Bill has been passed with the aim of improving the bankruptcy regime. Changes will ensure that bankrupts have a greater certainty as to when they are eligible to be discharged.

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Guanyu said…
Bankruptcy Amendment Bill passed

Hetty Musfirah Abdul Khamid, Channel NewsAsia

14 July 2015

The Bankruptcy Amendment Bill has been passed with the aim of improving the bankruptcy regime. Changes will ensure that bankrupts have a greater certainty as to when they are eligible to be discharged.

Under a new framework, a first-time bankrupt who pays his target contribution in full can be discharged as early as three years. His name will also be removed from public records, five years from the date of his discharge.

Target contribution refers to the total amount he has to pay to the bankruptcy estate before he is eligible for discharge. This is equivalent to 52 monthly contributions for a first-time bankrupt.

Those who fail to meet the target contribution will be eligible for discharge only after seven years. Their names will remain on record permanently.

Senior Minister of State for Law Indranee Rajah said in Parliament on Tuesday (Jul 14) that the changes aim to strike a balance between the need to hold bankrupts accountable and allowing them to have the opportunity to make a fresh start in their financial affairs after a reasonable period of time.

She explained: “The seven-year period was introduced because reviews show that further realisations are minimal after seven years and in recent years, most bankrupts were discharged after eight years. So between the three years and the seven years, to strike a balance and incentivise bankrupts to keep up with their monthly contributions.”

Previously, a bankruptcy order can be made if the debtor owes at least S$10,000 in debts. This threshold has been raised to S$15,000, to take into account of inflation.

Another change is to allow creditors to make an expedited bankruptcy application. After a demand for payment has been issued on a debtor, creditors will no longer to wait for a 21-day period to lapse before they can file for a bankruptcy application.

However, the creditor must show a serious possibility that the debtor’s property or its value will be significantly diminished.

Institutional creditors such as banks will also be required or be incentivised to appoint private trustees to administer some bankruptcies. The move is expected to ensure better utilisation of public resources as presently in many cases, the costs of resolving debts between private parties are borne by the State.

- CNA/ms

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