Debt repayment scheme

What Is the Debt Repayment Scheme (DSR) in Singapore?

From time to time, we all encounter problems with debt. Sometimes, keeping up with bills, credit card payments and borrowing obligations isn’t always easy and debts can spiral out of control – leaving people running the risk of bankruptcy. 

If you’re a debtor looking to agree a suitable repayment scheme or repayment plan with your creditors, the Debt Repayment Scheme DRS could help you to avoid stressful court or bankruptcy proceedings. 

Similarly, if you’re a creditor, the DRS can function as a debt repayment plan enshrined in law that helps you reclaim up to $150,000 from your debtors within 5 years or less. Let’s take a look at how the Debt Repayment Scheme DRS works.

What Is the Debt Repayment Scheme DRS? 

Simply put, the Debt Repayment Scheme or “DRS” is a pre-bankruptcy scheme that can be used as a viable and more favourable alternative to declaring bankruptcy.

When a DRS is initiated, an Official Assignee (OA) appointed by the Ministry of Law’s Insolvency Office will administer the debtors’ affairs by setting up a repayment scheme that bypasses the need for full-blown bankruptcy proceedings. 

A DRS can be a godsend during difficult situations where the debtor wants to avoid bankruptcy at all costs and the creditor or business simply wants to retrieve what they are owed without worrying about stressful bankruptcy proceedings, or any long legal case or high court hassle.

As a debtor, having a bankruptcy on your file can last for several years and affect anything from your personal reputation to your ability to find employment or set up a business in the future. If you are able to comply with the terms, a Debt Repayment Scheme is a much more favourable solution for those who wish to settle their debts amicably and easily. And as creditors will receive the money they are owed, it’s a win-win situation all round.

However, not everybody is eligible for the Debt Repayment Scheme DRS. Let’s take a look at eligibility criteria, suitability and what is required in the next section.

Who Is Eligible to Apply for the Debt Repayment Scheme?

For a debtor to be suitable for the Debt Repayment Scheme DRS, they will first need to meet the following eligibility criteria:

  • They should have unsecured debts totalling $150,000 or less
  • They mustn’t have been declared bankrupt or used the DRS scheme in the last 5 years
  • They must hold solid proof of current employment and a regular income

An assessment of all of the above will be carried out to ensure eligibility before you can apply and start your DRS. It is also important that you are not a sole proprietor or partner in a partnership or Singaporean business. When applying, you must not:

  • Present any false or misleading information, documents or supporting documents to the Official Assignee
  • Fail to pay the required submission fee or provide essential background evidence
  • Feign any losses or only part report your expenses when reporting to the Official Assignee
  • Withhold any information regarding your financial affairs, property or disposal of property 

In addition, your application must not give any unfair preference to any associates or other people you may have worked alongside during the time you accumulated the debt.

How Do I Apply? 

Assuming you meet the eligibility criteria outlined above, you can apply by first filing a bankruptcy application with the court. Alternatively, you may automatically be referred to the Ministry of Law’s Insolvency Office by the court if your creditors have already initiated bankruptcy proceedings against you. From here, it is for the Official Assignee OA to assess your eligibility and to advise on any next steps.

If you are deemed eligible, the Official Assignee will request a statement of your financial affairs, which should be submitted online (including any supporting documents) via the Ministry of Law E-Services portal for insolvencies and bankruptcies. You will need to:

  • First pay a submission fee of $350 
  • Next submit your Statement of Affairs
  • Then file your Income and Expenditure Statement
  • Submit your Debt Repayment Plan details (including time, agreed payment date etc.)
  • Provide evidence of your supporting documents (as per Annex B under law)

You can visit the Ministry of Law website directly here if you require more information or wish to initiate a bankruptcy application right now. Details of each part of all the documents you will need to submit can be found here, but you’ll need to issue them in the order we’ve outlined in the bullet points above.

Once all documents have been submitted, a DRS administrator will scrutinize them and a meeting of creditors will be set up in accordance with the law, in order for you, your creditors and the OA to reach an agreement on your monthly instalments under the new repayment plan. As with a standard bankruptcy, it will go down on your public record or file that you have been involved in a Debt Repayment Scheme.

What Happens if I Don’t Meet the Debt Repayment Scheme Criteria?

As we mentioned earlier, it’s up to the OA to assess your eligibility. If it turns out you don’t meet the suitability criteria, the Official Assignee will inform the high court that you are ineligible for the DRS, but the court will continue to hear your bankruptcy application, should you wish to proceed.

What Are My Obligations as a Debtor Under the DRS?

Naturally, once you’re enrolled in the Debt Repayment Scheme, you’ll have a number of obligations that you should fulfil in terms of sticking to your agreed repayment plan. It is important to comply with the terms of your DRS and satisfy your creditors’ expectations. You must:

  • Provide only truthful information regarding your financial situation and statement of affairs to your Official Assignee
  • Make sure any proof of debts filed by your creditors is 100% accurate
  • Fully disclose any details of your property (or any disposals of property from within the last 5 years) to your OA
  • Attend any meeting of creditors organized by the OA over the course of your DRS
  • Ensure the OA is fully aware of your home address and up-to-date contact details
  • Comply with all instructions issued by the Official Assignee at all times

Follow the rules of your Debt Repayment Scheme to the letter and you’ll receive a Certificate of Completion once all debts have been repaid. Set even a foot out of line, however, and your OA may issue a Certificate of Failure – but more on this in the next section of our blog.

The last thing you want is for unsatisfied creditors to initiate fresh bankruptcy proceedings against you that could have unfavourable consequences for your reputation for many years to come. Stay sensible and stay compliant.

What Happens After Completing the DRS?

If all goes according to plan, the Debt Repayment Scheme will enable you as a debtor to successfully repay all debts owed to your creditors within 5 years or less. At the last point in the process, you will receive a Certificate of Completion recognized under Singaporean law, which will legally release you from the majority of your debt obligations.

That said, any debts which you had not disclosed to your OA, or any which did not receive a corresponding proof in your creditors’ file earlier on in the process, may still fall under your responsibilities. It is crucial for both parties to correctly order their files and ensure the utmost accuracy of any documents from day one.

It is worth noting that your OA reserves the right to issue a Revocation of your Certificate of Completion if it later comes to light that you have failed to disclose vital information. If you are found to be in breach of the terms of the DRS at any time, you could risk receiving a Certificate of Failure – which will look bad on your personal record for many years. It could also open up the doors to your creditors being able to initiate fresh bankruptcy proceedings against you in the near future, so be careful.

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