Data on Debts Repaid to Creditors of Bankruptcy Estates in Last 10 Years and Plans to Enhance Creditor Recovery
Ministry of LawSpeakers
Summary
This question concerns the percentage of proven debts repaid to creditors in bankruptcy estates over the last decade compared to the Debt Repayment Scheme (DRS). Mr Saktiandi Supaat inquired about recovery rates and government plans to enhance creditor recovery to better support the rehabilitation of bankrupts. Minister for Law Edwin Tong Chun Fai explained that DRS recovery is more favorable because it targets debtors with regular income and debt under $150,000. He noted that the DRS allows debtors to avoid bankruptcy while ensuring creditors receive no less than they would under a bankruptcy order. The Ministry maintains dialogues with creditors and encourages prudent lending to balance recovery efforts with the bankrupt's need for a financial fresh start.
Transcript
41 Mr Saktiandi Supaat asked the Minister for Law (a) what percentage of proven debts have been repaid to creditors of bankruptcy estates administered in the past 10 years; (b) how does this compare to creditor recovery under the Debt Repayment Scheme (DRS); and (c) whether the Government has any plans to further enhance creditor recovery, under the DRS or otherwise, so that creditors can support the rehabilitation of bankrupts.
Mr Edwin Tong Chun Fai: The percentage of proven debts that have been repaid in bankruptcy cases varies from case to case and depends on factors such as the circumstances in which the bankruptcy took place and other extraneous factors, as well as the subsequent recovery (or otherwise) of the bankrupt. The corresponding percentage for cases under the Debt Repayment Scheme (DRS) has been comparatively more favourable given that the DRS applies in cases where the debtor has a regular income and where the unsecured debt does not exceed $150,000.
The DRS benefits both the debtor, who can avoid bankruptcy if he meets his obligations under the Scheme, and his creditors, who will receive no less than what they would have otherwise received had the debtor gone into bankruptcy. The Ministry of Law has regular dialogues with creditors to ensure that the debtors' repayment plans under the DRS continue to be viable.
While the Official Assignee will make reasonable efforts to help creditors recover debt, it is necessary to balance creditors' interest against allowing bankrupts and debtors to make a fresh start in their financial affairs. We encourage lenders to exercise prudence in extending credit.