Owe $11,000 10 years’ ago – can bankrupt, HDB?

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The debtor who has owed $11,000 since 10 years ago is facing the bankrupt problem told by the court, while there might be a way out through an HDB loan.

I refer to the article “Sole breadwinner security guard facing bankruptcy due to $11000 Courts loan” (transitioning.org, Oct 10).

It states that “Hi Gilbert,

I’ m at my wit’s end. I need your advice on what to do. I don’t have anyone to turn to for help. I”m Ali, age 41 the only breadwinner in the family and working as security guard bringing back $2k.

My wife is not working, I have 3 children schooling all in secondary school. My wife did try to find a job to help me but until now she is jobless. We live in a 1-room rental flat. The problem started when I received a letter from Courts, I’m owning $11k – that was more than 10 years ago in my 1st marriage.

I did call Courts, they demanded me to clear at least half of the $11k if not they will declare me as a bankrupt. As I have told them I have no lump sum to pay. I can only afford to pay $200 per month. But they deny me saying that they will not entertain my request.

Gilbert, I can’t ask for help from my family and wife’s family as before we were married my life was haywire. I went in and out from jail many times. After 2nd marriage for about 4 years, I’m on my right path.

I also did apply for BTO flat and will get keys in 2 years’ time. My wife has already paid $30k for the deposit of our flat through CPF. And I can’t afford to be bankrupt.

Please help to save my family Gilbert. I don’t know what else to do. I thought of doing 2nd job but I am already working 12 hours a day. Hope to hear from you soon Gilbert, thank you for your time.

Ali

****

Hi Ali

Hi sorry unfortunately we only help to clear backlogged bills eg SP TC or home rental.

Courts is home improvement so we cant really help you much.

My apology.

Do try and work out a repayment plan if possible…I feel they will rather take it monthly from you than make you a bankrupt and received nothing.

Do you know about Credit counselling Sg?

They help individuals restructure loans. Do go and check out their website at www.ccs.org.sg

Gilbert”.

From my experience and knowledge doing volunteer financial counseling for the last two decades or so – my understanding of your situation is as follows:-

Since the threshold for bankruptcy was raised from $10,000 to $15,000 on 1 August 2016 – bankruptcy proceedings can only be made when the debt owing is at least $15,000 (you owe $11,000).

However, with penalty interest and legal costs – your debt may spiral to hit the $15,000 benchmark.

However, since your debt is less than $100,000 the Debt Repayment Scheme (DRS) may apply to you.

“The Debt Repayment Scheme (“DRS”) is a pre-bankruptcy scheme which is administered by the Official Assignee under the Bankruptcy Act (Chapter 20).

It seeks a win-win outcome for both the debtor and his creditor. Debtors with unsecured debts not exceeding $100,000 will be able to enter into a debt repayment plan (“DRP”) under the DRS with their creditors and avoid bankruptcy, along with its restrictions and social stigma.

The proposed DRP must ensure that the interests of creditors are adequately safeguarded. These debtors will commit to the DRP and repay their debts over a fixed period of time of not more than 5 years. When the debtor meets his financial obligations under the DRS, he will be released from his debts and have a fresh start thereafter.” (Source: Official Assignee)

Since you have a full-time regular job with a regular salary – it is likely that the DRS will be applied in your situation.

As to “I also did apply for BTO flat and will get keys in 2 years’ time. My wife has already paid $30k for the deposit of our flat through CPF. And I can’t afford to be bankrupt” – even if you are eventually made a bankrupt – such as if you fail to meet the monthly instalments under the DRS – bankruptcy does not normally affect your HDB flat which you have already obtained – other than that no bank will give you a housing loan (so, your only option is an HDB loan which is assessed on your ability to service the loan).

HDB flats are also protected from creditors.

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.