IRDA-FAQ
FAQs ON INDIVIDUAL INSOLVENCY AND DEBT REPAYMENT SCHEME UNDER THE INSOLVENCY, RESTRUCTURING AND DISSOLUTION ACT 2018 (“IRDA”)
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When will the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) take effect? The IRDA takes effect on 30 July 2020 and will apply to Bankruptcy Applications filed on or after 30 July 2020. In respect of Bankruptcy Applications filed before 30 July 2020, the relevant provisions under the Bankruptcy Act will continue to apply to cases under the Debt Repayment Scheme. The IRDA will not apply to : (a) Cases that are already on the DRS, and (b) Cases where the bankruptcy application was filed before 30 July 2020. |
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Why has the debt threshold increased from $100,000 to $150,000 under the Debt Repayment Scheme? The primary objective of increasing the debt threshold from $100,000 to $150,000 is to allow more debtors to be eligible for the Debt Repayment Scheme. This allows debtors to avoid the stigma of bankruptcy and its restrictions whilst continuing to service their debts. |
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Under the COVID-19 (Temporary Measures) Act (“COVID-19 Act”) which takes effect from 20 April 2020 to 20 October 2020, the monetary threshold for a creditor to commence bankruptcy proceedings against a debtor is increased from $15,000 to $60,000 and the debt threshold under the Debt Repayment Scheme is increased from $100,000 to $250,000. In view that the IRDA comes into effect on 30 July 2020, which Act will take precedence? The COVID-19 Act will take precedence over the IRDA for the period from 20 April 2020 to 20 October 2020. However, this period is subject to change. During this relevant period, the monetary threshold for a creditor to commence bankruptcy proceedings against a debtor is $60,000 and the debt threshold under the Debt Repayment Scheme is $250,000. |