SINGAPORE - Changes to bankruptcy laws were tabled in Parliament on Monday to make it more difficult for people to be declared bankrupt and easier for them to exit bankruptcy.
If the changes proposed by the Law Ministry are passed, debtors must owe at least $15,000 - up from $10,000 currently - in order to be made bankrupt.
Banks and large businesses must also appoint a private trustee - at their own cost - when applying to make someone bankrupt, instead of relying on the Official Assignee (OA) at the High Court to manage the process.
Currently, the OA manages over 90 per cent of bankruptcies in Singapore. But the proposed amendment to the Bankruptcy Act would shift this burden to institutional creditors, which might make them more prudent about making loans in the first place.
In addition, a clearer path out of bankruptcy will be laid out in the amended law. The Bill tabled for its first reading on Monday introduced a discharge framework, which will provide for a timeline for debtors to exit bankruptcy.
First-time bankrupts will generally be eligible for discharge after five to seven years, while repeat bankrupts will be eligible for discharge in seven to nine years.
These time frames will depend on whether a bankrupt person has paid up his or her target contribution - a sufficient amount of his or her debt as determined by the trustee.
Those who fully pay their target contribution will have their bankruptcy record removed from the public register five years after their discharge. Otherwise, the record will be kept permanently.
The changes tabled on Monday were first revealed in January, when the Ministry of Law sought public consultation on the proposed amendments.
The Bill "seeks to… create a more rehabilitative regime for bankrupts, ensure better utilisation of public resources? and encourage creditors to exercise financial prudence when extending credit", the ministry said.