Pre-Bankruptcy

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Full Transcripts from Misleading Debt Consultancy Ads and More About DRS Podcast

Part 1: Common Calls received from Members-of-Public or Potential Debtors. Click to expand!

Caller: So I went to this certain debt consultancy firm to seek their advice. Wah I tell you, they charge their fees in thousands of dollars. I am considering to apply for the Debt Repayment Scheme (DRS) but I’m not sure about some of the information.

Basically, I want to check. Is it true to be able to be eligible for the Debt Repayment scheme, I need to file a bankruptcy application?

MinLaw Services Centre: Yes, sir, that is correct. To be considered for Debt Repayment Scheme, you must first file a bankruptcy application. The bankruptcy application will be heard in the High Court and you may be referred by the court to the Official Assignee to help in assessing your suitability to be placed under Debt Repayment Scheme. Please note that there will be criteria which you have to fulfil, such as the total debt owed is not more than $150,000, and most importantly, you must be employed. Otherwise, you may end up becoming a bankrupt if you do not meet the suitability criteria.

Caller: Wah confirm or not? That’s different from what I heard leh, they said don’t worry.

MinLaw Services Centre:Yes sir, it's good that you called to check to actually find out more about it.

Part 2: Information from DRS Officer. Click to expand!

Hi, this is Alvin Loo from the Insolvency Office under Ministry of Law. It is true that we do receive calls on Debt Consultancy Firms.

As you can tell from the conversation earlier, the feedback we receive is mostly related to the fees charged by some of these companies. There are also calls to verify the information that members of public receive from some of these companies.

The Debt Consultancy Firms are companies that advise individuals on the various types of debt management solutions that are out there in the market. On top of that, they also help their customers to prepare legal documents to submit to us and to the Court. We understand that they charge a fee for their services.

It is important for us to state that we do not endorse their services and we cannot offer any recommendations when it comes to the debt consultancy firms so if you see MinLaw associated with any of the social media or advertisements out there, please call us and check with us.

You are strongly encouraged to do your research when you encounter advertisements that appear too good to be true. For example, if the claim is that you can get a discount of up to 70 percent off your total debt, that is actually a huge discount and it’s a figure you should be very skeptical about.

One thing to note about Debt Repayment Scheme is that one is expected to pay off his debts to the best of his ability. So, there is certainly no guarantee that there will be a huge discount off your debt at the end of the day.

Straits Times actually published a very useful article on the various types of debt resolution options in Singapore, we will leave the link in the description box (https://www.straitstimes.com/business/schemes-that-help-you-manage-repayment). Just to summarise the key messages, there are various options in Singapore. First, you have the Debt Consolidation Plan, that is offered by the financial institutions directly. There is also the Debt Management Programme and that is offered by Credit Counselling Singapore. Lastly, there is also Debt Repayment Scheme and that is administered by Ministry of Law.

In summary, the debt repayment scheme is essentially for helping people to avoid getting into bankruptcy. Through this scheme, people who are in debt and have difficulty paying off the debt, can have their debt restructured into monthly instalments, for repayment within a period of five years. By doing so, they will get to avoid bankruptcy.

The important thing that we want the public to know is that there is no direct application for the Debt Repayment Scheme. You would only be considered for the Debt Repayment Scheme if a bankruptcy application has been filed against you. There are two ways in which a bankruptcy application can be filed against you. There are two ways in which a bankruptcy application can be filed against you. The first one is of course it is filed by a debtor, himself. The second way is when a creditor files a bankruptcy application against the debtor.

Once a bankruptcy application is filed, the case will be heard in the court. The court will then decide if the case should be referred to the Official Assignee for an assessment of the person’s suitability for the scheme. So here, it is important for everyone to note that the assessment result might not be favourable to a person. When a person is found to be unsuitable for Debt Repayment Scheme, he or she may eventually become a bankrupt.

One of the few misconceptions that debtors may have is that they have to pay a huge fee in order to get proper debt management advice. That is not true as there many other low cost or even free assistance out there.

At the end of the day if you prefer to have an expert to talk to, we would recommend that you approach a non-profit organisation like Credit Counselling Singapore. We understand that there is a small one-time fee that you need to pay to CCS but their info talks are actually free of charge. For more information, you can actually contact them directly.

If you are still in doubt and would like to find out more about the Debt Repayment Scheme under the Ministry of Law, please visit our website or you can call us at 1800-2255-529.