Adopted Changes to Debt Repayment Scheme Based on Public Feedback to be Tabled in Parliament

In June 2025, the Ministry of Law (“MinLaw“) conducted a public consultation on proposed amendments to the Debt Repayment Scheme (“DRS“) under the Insolvency, Restructuring and Dissolution Act 2018. The amendments aim to: (i) finetune the DRS to better meet the changing profile and needs of debtors while continuing to safeguard the interest of creditors; and (ii) enhance the existing administrative processes. MinLaw has now issued its responses to the feedback received in the consultation, which will be incorporated, where appropriate, in the upcoming Insolvency, Restructuring and Dissolution (Amendment) Bill to be tabled in Parliament.

Responses to Feedback Received

1. Introduction of a new criminal offence to target the soliciting and canvassing of any person to make a bankruptcy application

• Exemptions: Respondents expressed the need for exemptions for genuine debt consultancy firms (“DCF“) to assist debtors. MinLaw intends to exempt a select group of entities from the new criminal offence, including regulated professionals, institutions of public character and several social service agencies, so that they can continue to assist debtors in need by providing debt management related services.
• Penalty: Respondents suggested higher maximum penalties due to the high fees charged by DCFs. MinLaw is considering increasing the maximum fine to S$30,000, in addition to the proposed maximum imprisonment term of three years.
• Framework: Respondents suggested a licensing framework for DCFs. MinLaw will look into enacting a specific offence to address the communication, for purposes of business, of information about the DRS that is false and misleading.

2. Addition of two further grounds of unsuitability for the DRS: (i) failure to pay preliminary fees; and (ii) incurring of debts without any reasonable expectation of being able to pay

• Failure to pay preliminary fees: MinLaw confirmed that the failure to pay preliminary fees will be an independent ground for finding debtors unsuitable for the DRS.
• Reasonable ground of expectation (“RGE”): Respondents suggested that, when assessing RGE of being able to pay, the Official Assignee (“OA“) should also consider whether the debtor had sought to restructure his debt or sought the assistance of a non-profit welfare organisation or social service agency prior to self-petitioning for bankruptcy. MinLaw clarified that all relevant factors will be taken into account in an assessment on RGE. In each specific case, the focus is on whether the debtor had RGE of repaying the debt in question at the time of incurring such debt.

3. Imposition of a four-week deadline for creditors to file proofs of debt

• Timeline: Some respondents expressed that four weeks might not be too short a period. MinLaw confirmed that the four-week window adequately balances the interests of all the relevant parties, and that it will issue guides to help creditors file their proofs of debt and ensure proper communication channels to avoid delays.
• Notice: MinLaw declined the suggestion to publish a notice on its website when a debtor has been referred to the OA for DRS suitability assessment. This information can be obtained through a DRS digital search service.
• DRS structure: Some respondents suggested reducing the amount of debt haircut and lengthening the repayment period beyond five years. MinLaw responded that the current maximum duration of five years is adequate, and supported the current debt repayment rate.

To read more about the public consultation, please see our June 2025 NewsBytes article titled “MinLaw Consults on Legislative Changes to Prevent Abuse of Debt Repayment Scheme“.

Click on the following link for more information:

• Responses to Feedback Received from the Public Consultation on the Proposed Legislative Amendments to the Debt Repayment Scheme (available on the MinLaw website at mlaw.gov.sg)