Local cases of bankruptcy at 5-year high, but for many it is a fresh start

Changes to laws have enabled first-timers to be discharged in five to seven years

- Chor Khieng Yuit Senior Business Correspondent

Bankruptcy orders in Singapore are now at a five-year high, but lawyers say the process also gives individuals a chance to reset their financial lives once they eventually exit it.

Recent data on the Ministry of Law's (MinLaw) website showed that 1,395 bankruptcy orders were made in the first 10 months of 2025, surpassing the full-year totals recorded each year from 2020 to 2024.

Bankruptcy can be deeply distressing, and comes with restrictions such as being barred from taking on credit of $1,000 or more without declaring one's status, and being unable to travel or stay overseas without prior approval.

But changes to Singapore's bankruptcy laws in August 2016, which set out clearer discharge timelines and a more rehabilitative system, have enabled more bankrupts to stick to payment plans and find jobs that support their discharge.

The reforms have enabled first-time bankrupts to get out of bankruptcy in five to seven years if they pay their target contribution in full, with some exiting bankruptcy within as little as three years.

The target contribution is the total amount bankrupts need to pay during their time in bankruptcy. The amount is calculated with reference to the bankrupts' individual circumstances, and not the total debt size they owe.

Meanwhile, repeat bankrupts can be discharged within five to nine years.

A spokesperson for MinLaw told The Straits Times that there are also instances where some bankrupts have been discharged after seven years even though they did not fully meet their repayment obligations.

The changes have gradually helped more people get out of bankruptcy.

In 2024, for example, 810 individuals were discharged from bankruptcy, while another 646 individuals were discharged in the first 10 months of 2025, according to MinLaw data.

RESORTING TO BANKRUPTCY