Many Singaporeans view bankruptcy as the end of all their finances, however, though they are right that it means hitting rock bottom, bankruptcy also means starting over again from scratch.
Bankruptcy is not the end of everything, it is a legal status which a debtor can apply for or creditors can file an application to make a debtor bankrupt. A debtor can be bankrupt if the person can’t repay the debt amounting more than to $15,000. The high Court will then decide if the application should be granted. Should the status of bankruptcy has been finalized, the High Court will appoint an Official Assignee or trustee.
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The trustee has a couple of responsibilities to play for both the debtor and the creditors. The trustee will determine the Target Contribution the debtor has to pay to be discharged, the amount of the Target Contribution will be based on the salary of the debtor, the amount of money needed for the primary needs of his family and for him to go to work every day. The contribution will only be sufficed if the debtor is able to pay the Target Contribution in full within 52 months, 72 months for repeat bankrupt.
The trustee does not only handles the assets of the debtor and how they will be distributed to the creditors, but also investigates the debts, the affairs and conduct of the debtor.
Since January 2016, a total of 1,827 individuals had applications for bankruptcy. As we cringe for them, let’s have an idea on how they live their lives now. Singaporeans like other people around the world will try to avoid bankruptcy, yet if worse comes to worst how can you recover from it?
What happens if you are bankrupt?
- Confiscation of assets
Your estate or assets will be seized by the High Court and will be managed by the trustee. Bankrupt has to file the ‘Statement of Affairs’ within 21 days after the Bankruptcy Order has been filed. All information must be truthful and must include bot the assets and liabilities.
Fortunately, not everything will be taken away from the bankrupt. You can keep the HBD flat (unless it has been refinanced), necessities for your family to survive, your tools related to your trade as you still have to work, and assets you have been holding for someone.
- Bankrupts can still go to work, but a portion of their income goes to creditors
Bankruptcy does not mean your employer will dismiss you, though those who have work related to finances can get fired. You have to work regularly to pay off your monthly contributions to pay off your debt. Your creditors can’t get all your salary, as you still need to survive. Since you have very limited money, you need to explain to your trustee should you have been found out to have any luxury expenditures.
- Everyone will be informed
If you go bankrupt, you can’t keep it as a secret. Everyone will be informed and this includes your employer and the rest of the public. This can create a serious dent in your career. This is also the reason why bankrupts can’t get into higher position in the company.
- Can’t travel abroad
Should there be a pressing need to fly abroad, you must ask for your trustee’s approval. Your chance to go to another country will most likely depend if you are able to pay your monthly contributions diligently.
- Worst credit rating
Your credit rating will suffer from the financial blow. Banks will not give you any loan. This is the reason you have to rebuild your credit score.
- First-timers will be eligible for discharge after seven years if unable to pay off Target Contribution
For first timers, the faster you are able to reach your target contribution, the soonest you will be discharged, however your bankruptcy will stay in your public records for another five years after your discharge.
- Cannot start or continue legal action in courts without trustee’s permission
Since you are bankrupt, your legal actions must all go through your trustee. This, however, does not include legal actions pertaining to damages for personal injuries or matrimonial proceedings.
- A bankrupt is not allowed to obtain credit of $1,000 or more without revealing his bankruptcy status
You can use this opportunity to slowly build your credit score. You can get small personal loans and repay it. It may take years, but after five years of having your bankruptcy lifted, you can get back on track again.
- Cannot act as a director of a company
You cannot act as a manager or director of a company unless you have the permission of your trustee. You will be fined should you violate the restrictions.
Bankruptcy Recovery Steps:
- Submit Statement of Affairs
This way you will be evaluated on what can be left on your possession and which ones will be owned by the creditors. It is important to be honest since they will most likely find the truth anyway. Save yourself from more trouble.
- Meet the Target Contribution set by the Trustee
The earlier you settle your Target Contribution the faster you can be discharged. In as short as 3 to 5 years, the bankruptcy will be lifted provided that you have diligently paid for 52 months and no creditor objected. However, you can still be discharged after seven years despite failure to repay your contributions, the downside it your record of bankruptcy will be permanent. It will be harder to get a car loan, a mortgage or even a personal loan from banks and most financial institutions. Also, this will be the permanent hindrance when looking for a job. It will be catastrophic if your career is in finance.
- Have a financial self-evaluation
Know how you spend your money. While the trustee is already evaluation your finances, you also should do the same for yourself.
- Have a monthly budget
No matter how small is the cash at hand, it is still handy to have a monthly budget to keep track on your limited finances.
- Pay the bills on time
By paying the bills on time, you can avoid being in more debt and you can rebuild your credit score.
- Rebuild credit score
Rebuild your credit score by getting small loans and paying it.
- Choose your lender wisely
There will be a lot of lenders who will try to take advantage of your needs for cash, however choose the best and trusted money lender in Singapore as your financial partner. It will be better to stay with one lender rather than get loans from multiple financial institutions. Money lenders who have loyal clients sometimes give discounts or omit the documentation fees.
If you need the best personal loan in Singapore coming from a reputable money lender, you can start by dropping by Cash Mart. Cash Mart not only focuses on creating various flexible loans products, but also values a lasting relationship with its clients.
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