Psychological and Counselling Support and Legal Advice for Bankrupts

1 Mr Gan Thiam Poh asked the Minister for Law whether the Ministry will consider providing psychological and counselling support and legal advice for all bankrupts.

The Second Minister for Law (Mr Edwin Tong Chun Fai) (for the Minister for Law): Mr Speaker, the bankruptcy regime aims to help bankrupts make a fresh start in their financial matters, whilst at the same time, also ensuring that the rights of creditors remain adequately protected. When a person is made a bankrupt, his or her estate will be administered by the Official Assignee or a Private Trustee appointed by the General Division of the High Court.

MinLaw’s Insolvency Office makes available to debtors and bankrupts user-friendly information on the bankruptcy process. The Insolvency Office does not provide direct psychological and counselling support or legal advice to bankrupts. However, it maintains a list of social service agencies and legal clinics so that it can make the necessary referrals to bankrupts where appropriate. If bankrupts require psychological and counselling support, the Official Assignee or appointed Private Trustee will refer them to a suitable social service agency or family service centre. If they require legal advice, they are referred to the Legal Aid Bureau or a suitable legal clinic in the community, depending on their profile and the subject matter on which they seek advice.

Mr Speaker: Mr Gan.

Mr Gan Thiam Poh (Ang Mo Kio): I thank the Minister for the comprehensive reply. I have noticed that a lot of bankrupts, especially the first timers, when they were made bankrupt, they are traumatised emotionally and also psychologically, and some of them even slip into depression. In quite a lot of cases, they do not understand what is meant by being bankrupt. As such, could the Ministry provide psychological support or counselling to all the first-time bankrupts?

Mr Edwin Tong Chun Fai: I thank Mr Gan. Sir, the Insolvency Office under MinLaw routinely advises the bankrupts. We understand that it can be a traumatic, a novel experience even, for bankrupts to be in this situation. So, whilst they are bankrupt, the Insolvency Office working with various social service agencies, as I had mentioned, and also agencies such as Workforce Singapore and NTUC's e2i in the context of assisting bankrupts with employment opportunities.

In addition, the Insolvency Office has also had the benefit of working with Singapore Polytechnic's Institute of Financial Literacy. This tie-up helps to provide bankrupts with financial literacy courses to allow bankrupts to make plans whilst they are bankrupt, and also to look at the options available to them after they are discharged from bankruptcy so that they can organise and maintain their financial matters better.

In addition, as Mr Gan might be aware, we have over the last few years, instituted the Revised Debt Repayment Scheme which allows individuals, pre-bankruptcy who have a steady stream of income and whose debts do not exceed a certain amount – in this case, we recently revised it to $150,000 – for them to benefit from a programme where these debts can be serviced through a repayment plan over a period of time with their creditors; and in this way, also avoid bankruptcy, the stigma of bankruptcy and also the longer tail impact that bankruptcy may have on the individual.

So, there is a range of different options, beginning with pre-bankruptcy for an individual who is in financial difficulty; and also, if they inevitably go into bankruptcy, there is a series of support options open for them to seek advice from and to try and find a way out of bankruptcy; and also, as I had mentioned, post-bankruptcy, how they can organise and maintain their financial matters better to avoid being in the same situation again.