Stave off bankruptcy with the Debt Repayment Scheme

Stave off bankruptcy with the Debt Repayment Scheme

NAV TL;DR

If you don’t have time to read through the whole article, you can check out our short version below.

The Debt Repayment Scheme (DRS) can keep bankruptcy at bay.

  • It is initiated if you file for a bankruptcy or if your creditors start bankruptcy proceedings against you.
  • To qualify, your total unsecured debt must be up to S$100,000 and you must be employed and earning a regular salary, among other criteria.
  • The Official Assignee will help you draw up a debt repayment plan, which lasts for up to 5 years. If you successfully repay your debts, you will not be recognised as insolvent.

If you find yourself knee-deep in debt and are beyond the Debt Consolidation Plan (DCP), there is still a lifeline that can help you avoid bankruptcy: the Debt Repayment Scheme (DRS).

Administered by the Official Assignee (OA) from the Ministry of Law’s Insolvency Office, it is for people in more dire financial straits and who have filed for bankruptcy or have bankruptcy proceedings initiated against them.

Boosting Financial Health

It is not application-based but initiated if you file for a bankruptcy or if your creditors or lenders start bankruptcy proceedings against you. The OA will assess your eligibility for the DRS.

The eligibility criteria include:

  • Total unsecured debt of up to S$100,000
  • Employed and earning a regular salary
  • Not been a bankrupt or on the DRS in the past 5 years
  • Not been subjected to a court-based arrangement with creditors in the past 5 years
  • Not a sole proprietor/partner in any business

Source: Ministry of Law’s Insolvency Office

If you are deemed eligible, the OA will help you draw up a debt repayment plan. You must then start paying off your debts through the OA within the agreed period of up to 5 years.

Doing so will release you from the debts that you had disclosed or were filed by the lenders. Otherwise, your creditors may initiate a fresh round of bankruptcy proceedings against you.

The main advantage of the DRS is that your name will not be published publicly, whereas a bankrupt will be publicly recognised as insolvent.

In addition, unlike in a bankruptcy, you face no travel restrictions, have a fixed period to repay debts, and can maintain a regular savings account.

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