Commentary: Why are more people in Singapore going bankrupt?

File photo of people crossing the road in Orchard Road in Singapore on Oct 19, 2022. According to data from the Ministry of Law's Insolvency Office, Singapore witnessed an unprecedented surge in personal bankruptcy applications in 2023, hitting an 18-year high at 3,986.

were rolled out to support companies and individuals facing financial difficulties. These were instrumental in providing a safety net for those most affected. “For some time to come, Singapore will have to operate in an external environment that will be less stable and favourable to our security and prosperity than the preceding three decades,” Finance Minister and Deputy Prime Minister Lawrence Wong said in his Budget 2024 speech on Feb 16.

During the temporary COVID-19 support measures from April to October 2020, adjustments were made to these thresholds. The minimum debt level required for a bankruptcy application was temporarily raised from S$15,000 to S$60,000. Simultaneously, the eligibility threshold for the debt repayment scheme saw an increase from S$150,000 to S$250,000.

Given the changing value of money, raising the bankruptcy threshold may discourage filing for bankruptcy for smaller debts and push creditors towards negotiating debt settlements. However, the challenge lies in finding a balance between policy goals to avoid discouraging lending and increasing borrowing costs.

Previously, only institutional creditors were mandated to appoint private trustees in bankruptcy filings. With the amendment, all bankruptcy cases in Singapore, except those deemed of public interest, will be handled by private entities such as lawyers.

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