More people declared bankrupt in 1st half of 2024 from a year ago

Avoiding it essentially boils down to being financially prudent and ensuring you do not overspend

- Chor Khieng Yuit

Senior Business Correspondent Applications for bankruptcy rose in the first half of 2024, as did the number of people declared eventually bankrupt.

Recent Law Ministry (MinLaw) data shows that 2,334 people filed for bankruptcy in the six months to June 30, up 25 per cent on the same period in 2023, while 594 were later declared bankrupt, an increase of 11 per cent.

It also notes that there were 9,903 undischarged bankrupts as at June 30, 2.4 per cent more than the 9,669 as at Jan 31.

Filing for bankruptcy can be distressing, given the stigma that surrounds it, one that brands applicants as failures or over-spenders.

There are also more serious repercussions, as bankrupts are restricted from taking on certain roles and may even lose their jobs.

That is why bankruptcy should be regarded only as a last resort, particularly when it starts to put a strain on a debtor's mental health or on the family.

Avoiding it essentially boils down to being financially prudent and ensuring you do not overspend and end up in a cycle of never-ending and ever-ballooning debt.

An individual can apply for bankruptcy in the High Court or his creditors can do so if the person has unpaid debts of at least $15,000.

The case will be assessed to determine if the person is suitable for the Debt Repayment Scheme (DRS), a programme administered by MinLaw that aims to help a borrower avoid bankruptcy.

An individual is considered for the DRS only if a bankruptcy application has been filed against him; debtors cannot apply directly to join. There is no certainty he will get onto the DRS as he must meet certain criteria, including a total debt size of not more than $150,000, and most importantly, he must be employed.

Those who qualify for the DRS must still repay their debts in monthly instalments for a fixed period of not more than five years, said Ms Tan Huey Min, general manager of Credit Counselling Singapore.