Trend of Singaporeans being Declared Bankrupt and Average Time to Exit Bankruptcy

10 Mr Desmond Choo asked the Minister for Law (a) over the last 10 years, what has been the trend of Singaporeans being declared bankrupt; (b) what is the average time taken to exit bankruptcy; and (c) what are the measures taken to ease difficulties in job search and employment because of bankruptcy.

The Senior Minister of State for Law (Mr Edwin Tong Chun Fai) (for the Minister for Law): Mr Deputy Speaker, the number of Singaporeans declared bankrupt each year has remained stable and averaged around 1,400 individuals between 2010 and 2018. In the same period, the average time taken for Singaporeans to exit bankruptcy is 9.7 years.

MinLaw has introduced various enhancements to the bankruptcy regime to help individuals avoid bankruptcy and also reduce the time taken for bankrupts to exit bankruptcy.

The Debt Repayment Scheme, for instance, or DRS, introduced in 2009, allows individuals with steady employment and whose unsecured debt do not exceed $100,000 to avoid bankruptcy by developing a repayment plan over a period of time with their creditors. With the upcoming implementation of the Insolvency, Restructuring and Dissolution Act, the cap will be raised from $100,000 to $150,000. This will allow more debtors to qualify for DRS and avoid bankruptcy with the consequent risk of losing their jobs.

The Differentiated Discharge Framework, or DDF, which was introduced in 2016, provides a more rehabilitative regime, with clear goals and timelines for the insolvent individual to meet to be discharged at various points.

Under this framework, first-time bankrupts will generally be able to achieve discharge within a shorter time-frame of between five to seven years, if they cooperate by keeping to the conditions of bankruptcy and they also make the required contributions each time.

For cases which pre-date the DDF, the Insolvency Office has since 2014 stepped up efforts to actively review deserving bankruptcy cases for a timely discharge. Individual bankrupts who have made satisfactory contributions to their estate and who have been cooperative with the Insolvency Office during the administration of their bankruptcy are discharged expeditiously, so that they can have a fresh start in their financial affairs.

The Insolvency Office routinely advises Singaporean bankrupts who require assistance on employment on the available avenues for help. Such avenues include Workforce Singapore (WSG) and NTUC's Employment and Employability Institute (e2i). And through the Adapt and Grow initiative, WSG and e2i offer employment facilitation services, such as career coaching, employability workshops, job fairs and job matching. They also provide a suite of employment support programmes to help jobseekers including bankrupts, take up new jobs and careers.

All employers in Singapore are expected to practise fair and merit-based employment practices, as laid out in the Tripartite Guidelines on Fair Employment Practices. Where there are specific requirements to ask for an applicant's bankruptcy status at point of application, employers should state the reasons, which must be job-related. This may be necessary for some jobs, for example, those in the financial industry, where employees are required to be free from any financial embarrassment.

Mr Deputy Speaker: Yes, Mr Choo.

Mr Desmond Choo (Tampines): I thank the Senior Minister of State for his clarification. I have two points. One, increasingly, Singaporeans would need to travel to seek employment opportunities outside of Singapore. How prepared are we to allow Singaporeans who are bankrupts to make regular travels so that they can establish a career and so that they can eventually pay off their debts?

The second point is, as we head towards economic uncertainty, how flexible is the system to prevent more Singaporeans who get into bankruptcy or to get out of bankruptcy faster, so that they can leach on to better opportunities?

Mr Edwin Tong Chun Fai: Mr Deputy Speaker, under the bankruptcy regime, there are restrictions which are placed on a bankrupt's ability to travel and that is for good reason. It minimises and mitigates the risks of any dissipation of assets or any leakage in terms of the bankrupt's estate.

Nonetheless, where a bankrupt is trying to look for a job, seek employment and perhaps that might require, say, for instance, travel overseas to attend an interview or it is part and parcel of his job to run an office overseas if that is part of his job requirement, then the Office Assignee's discretion will extend to allowing that travel to take place.

The Member's second question is about the flexibility of the framework. As I explained in my opening remarks and the answer I gave earlier, we are looking at different options, both before bankruptcy as well as the differentiated framework after bankruptcy. That allows the Official Assignee to look at circumstances relevant to the particular bankrupt, as the case, may be for the purposes of this charge. Obviously, the conduct and the affairs of the estate for two bankrupts will not be the same. So, those factors will be looked at in terms of the differentiated discharge framework.

As I mentioned earlier also, under the arrangement for DRS, the threshold will be raised from $100,000 to $150,000 and that will facilitate more persons coming into the scheme to avoid bankruptcy even before creditors make the claim against them.