The Debt Repayment Scheme (DRS) allows eligible debtors to repay debts without the social stigma and various restrictions of bankruptcy.

It is available only if a creditor applies to have the debtor made bankrupt.

As of May this year, 1,980 debtors have been placed on the scheme since it was rolled out in May 2009. Currently, there are 1,032 debtors on the DRS.

According to the Ministry of Law, the DRS protects a debtor's interests by disallowing any unsecured creditors from proceeding with any action against the debtor, except with the court's permission. It also protects the creditors' interests through sustainable repayment plans.

Under the DRS, creditors generally receive no less than what they would have received had the debtor been made bankrupt.

DRS is not a voluntary scheme, unlike the Debt Consolidation Plan and the Debt Management Programme.

Eligibility for consideration for DRS can be triggered only by a bankruptcy application being made in court against the debtor. This means the debtor may end up being made bankrupt if it turns out that he does not qualify for the DRS.

Acceptance into the DRS is subject to strict eligibility criteria. For example, the debtor must be gainfully employed, with debts under $100,000.

DRS debtors typically take about five years to complete repayments. For debtors who fail to complete the DRS - such as failing to comply with agreed payments - a fresh bankruptcy application may subsequently be made against them.

Lorna Tan