FAQ : DEBT REPAYMENT SCHEME (DRS)
DEBT REPAYMENT SCHEME
What is Debt Repayment Scheme?
The Debt Repayment Scheme (DRS) is a repayment scheme to assist debtors who have a regular income and debts not exceeding S$150,000 to avoid bankruptcy.
When did DRS start?
The Scheme came into operation on 18 May 2009, and is applicable to bankruptcy applications made on or after 18 May 2009.
Can creditors still take action against the debtor after the commencement of the Debt Repayment Plan (“DRP”) for debts owed to them?
Creditors whose debts were incurred prior to the commencement of the DRP should file a Proof of Debt with the Official Assignee, notwithstanding that the DRP has commenced.
Can I own a car while under the Debt Repayment Scheme (DRS)?
A debtor on the DRS is not restricted from owning a vehicle.
Can I take a bank loan for my HDB flat if I am a debtor on DRS?
The Official Assignee does not impose any restrictions on debtors to apply for a bank loan for the purchase of an HDB flat.
However it is at the discretion of the bank to approve the application in view of the debtor’s DRS status.
Do debtors on DRS have any travel restrictions to adhere to?
A debtor will not face any travel restrictions, so he is not required to submit a travel application to leave Singapore.
However, it is important to note that this must not be used as an excuse for any default in the DRS monthly installments or failure to attend any meetings scheduled by the Official Assignee.
How can I be terminated from DRS?
The DRS can terminate in one of the following ways:
1) Upon the death of a debtor
2) Upon completion of DRS
3) Upon failure from the scheme
4) Upon being issued with a Certificate of Inapplicability when a debtor’s liabilities exceed $150,000 after the commencement of his DRS plan.
How does the Debt Repayment Scheme (“DRS”) work?
When a bankruptcy application is made to the High Court (“Court”) and the debts owed do not exceed $150,000, the Court may refer the debtor to the Insolvency Office (“IO”) for the Official Assignee (“OA”) to assess the debtor’s eligibility and suitability for the DRS. If the debtor satisfies the qualifying criteria and the OA assesses him to be suitable for the DRS, the OA will assist the debtor to devise a DRP.
How long does an assessment for DRS take?
At the first hearing of the bankruptcy application, the Court may adjourn the matter for up to 6 months to enable the OA to assess the debtor’s suitability for DRS.
How will a debtor be eligible and suitable for the Debt Repayment Scheme (“DRS”)?
The debtor has to satisfy the following eligibility criteria:
a. Total liabilities do not exceed $150,000;
b. Gainfully employed and earning a regular income;
c. Not been a bankrupt or been on the DRS in the last 5 years;
d. Not been subject to a court-based arrangement in the last 5 years; and
e. Not a sole-proprietor or partner and/ or should not be a director in any firm.
Is a creditor to a debtor on DRS allowed to negotiate an instalment plan with the OA on the debtor’s repayment?
The Official Assignee does not negotiate with the creditors, but rather will propose a viable instalment amount over a period of 5 years based on the debtor’s income and liabilities in order to balance the interest of both debtor and creditor.
What are some of the duties that a debtor must comply with?
a. A debtor must pay his instalments, bonuses from his salary and fees when required.
b. He must not make any preferential payments to his creditors after his Debt Repayment Plan has commenced.
c. In addition, he must not incur further liabilities that he does not have the ability to repay.
d. He must also keep the Official Assignee updated of any change in his address and contact details at all times.
What happens if a debtor on DRS defaults on his instalment payment?
The Official Assignee may issue a Certificate of Failure against him and the OA will inform his creditors of this.
The creditors may then apply for fresh bankruptcy proceedings against the debtor. The debtor may be adjudged a bankrupt.
What if I become unemployed while on DRS?
If debtor is out of job, the OA can suspend the monthly repayment for a maximum of 3 months but subject to the OA’s approval.
The debtor has to submit documents to substantiate the unemployment; such as a letter of retrenchment from the employers or the latest CPF contribution statement indicating zero contribution in his last month of employment.
What if I finish repaying my instalments before the end of my DRP as a debtor on DRS?
If a debtor is able to make full payment before the end of his DRP, his DRS records will be deleted from the Credit Bureau of Singapore (CBS) upon making his full repayment and receiving his Certificate of Completion from the OA.
What is a Certificate of Completion for DRS?
The debtor will receive a Certificate of Completion once he has completed the DRS successfully.
What is a debtor’s minimum repayment amount?
There is no fixed minimum repayment amount. It is determined by taking into account the debtor’s financial circumstances, his income and expenses.
What is the duration within which the repayments under the Debt Repayment Plan (“DRP”) must be completed?
The maximum duration of a DRP is 5 years (60 months). In any given case, the length of a DRP would vary depending on the total debt size and the monthly instalment amount.
What makes a debtor unsuitable for the Debt Repayment Scheme (“DRS”)?
The debtor is unsuitable for DRS
a. when he fails to comply cooperate with the Official Assignee (“OA”).
b. By not complying with the OA’s instructions (e.g. failed to submit or complete the documents required of him,
c. pay the required fees,
d. his liabilities exceed $150,000)
When does a debtor start his first monthly instalment?
Once a debtor has been determined to be suitable for Debt Repayment Scheme (“DRS”), he has to prepare the payments for the stipulated first monthly instalment amount and first year’s annual fee.
The sooner a debtor starts on the DRS, the less he will be paying in the long run as interest on the claims made by his creditors will stop running on the day the Debt Repayment Plan starts.
The Official Assignee will inform the debtor, the Court and the applicant-creditor of the outcome of the assessment. The bankruptcy application made against the debtor will be deemed withdrawn if the assessment is successful.
Where can a debtor make the payments of his fees and instalments under the Debt Repayment Scheme?
A debtor can make payment via the following platform:
e-Collection Portal
The debtor must provide his DRS Case Number (e.g. D00XXXX-2012) and the nature of the payment e.g. instalment or bonus payment.
Will my bank account be frozen if I am a debtor on DRS?
The Official Assignee will not freeze the debtor’s bank account, as he was not adjudged a bankrupt.
However the bank may choose to do so in order to protect its own interests upon learning of the debtor’s DRS status.
Will others know about my status in DRS?
The Official Assignee does not inform the debtor’s family or employer of his DRS status.
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