Bankrupt in Singapore: What are the Consequences?


Ryan Ong



As of 2011, there are almost 25,000 un-discharged bankrupts in Singapore. The good news is the number of bankruptcy cases has dropped, by more than 20 percent since the ’90s. And now that MoneySmart is up, no one will ever go bankrupt again. I mean, have you been reading my articles? My advice is so good, I discharge a bankrupt every time I twitch. But just in case I’m exaggerating a bit, here’s an article that explains what bankruptcy entails:


What is Bankruptcy?

Bankruptcy is when someone owes more money than they can pay. If finance is a sport, the bankrupt’s field position is Left-Right-Out: bankrupts are no longer in the cycle of exchange. However, it’s a common misconception that bankruptcy is “the end”.

It’s more appropriate to think of bankruptcy as a “reset” button, where someone has to rebuild their finances from scratch. While it’s rare for former bankrupts to ever get rich (I’ll explain later), it’s quite possible for them to at least recover.


How Does Someone Become Bankrupt?


Man with headache
“Oh man, I should have consulted my zodiac before betting my life savings on roulette.”


It’s possible to file for bankruptcy so long as you (1) owe at least $10,000 in total, and (2) have absolutely no way to repay the amount. These conditions will be assessed by the courts, and a person can be a declared bankrupt within 4 – 6 weeks of the application. It’s also possible for the bank to start proceedings to declare someone bankrupt, if it’s obvious they’re in this state.

Once that happens, the consequences roll in:


Seizure of Assets

Like a pack of rabid scavengers, creditors get to seize and divide the assets of the bankrupt. They pretty much browse through the bankrupt’s belongings, and cherry pick anything they can use or auction. However, there are some things they aren’t allowed to take:

  • Necessities for the bankrupts and their families, which can include their HDB flat. However, if a flat has been refinanced, there may be provision for a foreclosure.
  • The bankrupts’ tools of trade. This is anything the bankrupts need to continue doing their jobs. If the bankrupt is a mechanic, for example, his tools are off-limits.
  • Anything the bankrupts may be holding in trust for someone else. So if a bankrupt is holding a house in trust for a nephew, that house can’t be taken.


Natural Born Creditors: Many bankers do not trace their ancestry to apes.


Statement of Affairs

Bankrupts can carry on with work, but with one exception: a portion of their income is shared by creditors. For the remainder that they keep, they need to provide a statement of affairs. An officer appointed by the court will do periodic checks.

In effect, the bankrupts need to justify every little expense. So if they used a cab instead of the bus, there had better be an earth-shaking reason (i.e. my wife was pregnant and headed for the hospital). Receipts for everything have to kept and tallied, and life just gets inconvenient.


Employers and the Public are Informed

Bankruptcy is advertised, so anyone checking the bankrupt’s records will know about it. Employers will be informed; while it usually doesn’t result in termination, it can ruin career prospects. It’s unlikely that a bankrupt is going to land a managerial position.


Busker on the street with guitar
Yeah, they really have to advertise it, because how else will people know? 


For anyone in the finance industry (such as a banker), bankruptcy is even worse. Most of the time, it results in termination as well. Finding another job will be difficult: bankruptcy is a resume stain.


No Overseas Travel

Bankrupts need to inform the courts if they want to travel overseas. Apart from work reasons, this is seldom approved. A bankrupt who goes abroad without permission will be jailed upon return, for up to two years.

There’s also a fine of up to $10,000 (Yeah, that makes sense).


Dog at airport customs
“Warren is our new bankruptcy sniffer. Don’t go near him with an empty wallet.”


Impaired Credit Rating

Even after bankrupts are discharged, their credit ratings may remain poor. It can take up to seven years for a bankrupt to rebuild a credit rating, and there is no guarantee of this.

I mentioned before that, while bankrupts can recover, they seldom get rich. This is one of the main reasons: with a terrible credit score, it’s hard to start any kind of business or private investment. A former bankrupt will find it hard to even get a car or housing loan, let alone find funding.


Bank teller on computer
“Were you bankrupt? Because when I searched your credit history my PC froze, my screen burned out, and our server e-mailed swear words to you.”


When Does it End?

If a bankrupt owes less than $100,000, the court may discharge him after three years. This is assuming none of the creditors object. Otherwise, a person remains bankrupt until all their creditors are paid off.

Most people don’t consider being discharged to be the “end” of bankruptcy. What usually follows a discharge is an extensive credit repair process, under the guidance of Credit Counselling Singapore.

Ultimately, bankruptcy is a painful, but sometimes necessary step. The important thing is not to see it as a terminal condition, if and when it happens. But keep up with MoneySmart articles, and I’m sure this won’t ever happen to you.


Image Credits:
CousinjacobMr.Thomasjurvetsonjohnny_boy_ARochelle, Just RochellePhillipCtheeruditefrog

Do you have questions about bankruptcy? Comment and let us know!

Keep updated with all the news!

Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.

  • Nick E Lim

    Hi, hope this would help me. I’m a foreigner holding a work permit. I’m recently asked to fill up for bankcrupt by the bank. The problem is i have lost my job since and are staying in JB. They won’t allow for travelling overseas, but how?

  • jo

    My husband has discharged from bankruptcy in June 2015. We went to apply for in principle approval for home loan for our new EC recently but was unsuccessful. We are desperately to get the new home as my parent in laws are moving to stay together and we need a bigger unit to accommodate a family of 5 members plus 1 helper and my parent in laws. I really need someone who can assist and advise me on how to get the home loan.

  • Baey Ee-Qiang David

    Hi Jo,

    We may have a few methods that we can explore to help you and your husband in securing the loan. However We here at Moneysmart do need to know more details before deciding on the best solution.
    Please email [email protected] with your contact number so we can reach out to you.

    Senior Mortgage Specialist

    • hershedazz alias

      Hi Baey,

      I would like to know is there any methods my husband can secure a loan? He was just discharged a month back and currently we are moving house, did call up the bank they say the chances are not sure.

      But we really need at least a small amount of the loan,

  • Mango Tan

    Hi, mai i check if my family members will find out about my bankruptcy? i have no assets under my name and i am living with my parents. kindly advise.

    • alex wong

      if you self declare bankrupt. chances of your family member know is low. unless u so unlucky they saw your name in the newspaper

  • ML

    My acquaintance was recently judged as bankrupt and he has yet to return me 5 digits sum that I gave him for joint investment. He was sued by some other people and became in this state. Do I still have chance to get back my money and how do i go about it? I am quite desperate to get back because my family is getting a new hdb very soon and need $ for that. Someone please kindly advise me. Tq.

  • Ayaka

    Hi, how much will it cost to declare bankrupt? I read online that to self declare brankrupt, application is 1.6k. How much is the lawyer fee?

  • pd

    have credit cards debt to 6 financial institutions (4k to 8k credit limit) tried to pay but couldn’t keep up. stopped paying 3-4 year ago
    last i check already 30k++ for 1 bank alone. think if all combined should come to 100k
    age 58 now n need to know more on bankruptcy procedures n consequences