Recent data by the Ministry of Law shows that there has been an increase in the number of Singaporeans filing for bankruptcy in the first half of 2024, compared with the same period last year.
From January to June 2023, 1,871 Singaporeans applied for bankruptcy, whereas from January to June 2024, 2,334 Singaporeans applied for bankruptcy. That’s about a 25% increase.
Out of the 2,334 applications, 595 bankruptcy orders were made.
So, what are some potential reasons for this increase?
In early 2024, Alvin Tan, Monetary Authority of Singapore (MAS) board member, said in Parliament that 2023’s bankruptcy applications were at an 18-year high (3,986 in total by December 2023).
However, he noted that not all applications resulted in bankruptcy orders (1,096 total by December 2023).
“The trend of bankruptcy orders has been largely stable over the recent years and it is also below pre-COVID levels,” he had added.
Tan pointed out that bankruptcy applications then rose “amid the challenging macroeconomic and financial environment for corporates and individuals in recent years”, as well as the “higher global interest rates environment”, which caused domestic interest rates to rise sharply.
In a commentary piece earlier this year, CNA looked into some potential factors behind the rise of bankruptcy applications in Singapore.
Some things observed included the phasing out of pandemic aid, climbing interest rates, and geopolitical uncertainties that affect our national economy.
Another point of consideration posed by CNA’s commentary was whether or not Singapore’s bankruptcy threshold is too low.
The current threshold to file for bankruptcy is the debtor having incurred at least a total of S$15,000 in unpaid debts.
Before reforms are made to these debt frameworks, however, “a nuanced analysis of bankruptcy trends is crucial”, the CNA commentary piece stated.
“This means considering factors like the range of debt levels, the proportion of business owners among debtors, causes of indebtedness, the proportion of creditor-initiated bankruptcy applications and the effectiveness of creditor recovery in bankruptcy cases,” lawyers Lance Ang and Adrian Peh, who contributed the article, wrote.
To prevent the issue from being exacerbated, the national financial education programme, MoneySense, actively educates the broader public on money management skills.
Debtors who require additional support can also seek help from avenues such as Credit Counselling Singapore.
- See the annual statistics on bankruptcy in Singapore here.
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