Facing mounting debt is a stressful experience, and for many, the idea of declaring bankruptcy can feel like the only option. Fortunately, Singapore offers a less drastic alternative for individuals with manageable debts: the Debt Repayment Scheme (DRS). Here’s why the DRS might be the solution you’re looking for and how it can help you avoid the long-term consequences of bankruptcy.

Why Choose the DRS?

The DRS offers several advantages over bankruptcy. While bankruptcy can have long-lasting consequences on your credit record and ability to borrow, the DRS provides an opportunity to settle your debts in a structured manner without the same level of financial and reputational damage. You can continue working, earning income, and maintaining a certain level of financial independence.

Eligibility for the DRS

The first step to benefiting from the DRS is determining whether you qualify. To be eligible:

• Your total debt must be less than $150,000.
• You must be employed with a stable income.
• You should not have been involved in bankruptcy or another DRS arrangement in the last five years.
• You should not have been part of any court-arranged debt settlement in the last five years.
• You cannot be a sole proprietor or business partner.

If you meet these criteria, the next step is to work with the Official Assignee (OA) to assess your suitability for the DRS.

What Happens Next?

Once the OA has assessed your case, you’ll be asked to submit key documents, including your financial records and a proposed repayment plan. The plan should outline how much you intend to repay each month and how long it will take to settle your debts.

After your submission, the OA will determine whether the plan is feasible and fair to both you and your creditors. The DRS administrators will then negotiate with your creditors to finalize the terms.

Commitment to the Repayment Plan

One of the key aspects of the DRS is staying committed to your repayment plan. Missing payments or failing to comply with the OA’s requirements can result in your case being sent back to court for bankruptcy proceedings. It’s essential to be realistic when developing your repayment plan, ensuring you can meet your obligations while still covering your everyday expenses.

Conclusion

The DRS is a lifeline for individuals facing financial hardship, providing a way to repay debts without the long-term damage that comes with bankruptcy. If you meet the eligibility requirements, it’s worth exploring this option to avoid the more severe consequences of insolvency.