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The Official Assignee administers the Debt Repayment Scheme, which is a pre-bankruptcy program.
It aims to achieve a win-win situation for both the debtor and the creditor. Debtors with unsecured debts of less than $150,000 will be able to enter into a repayment plan with their creditors under the Debt Repayment Scheme and avoid Bankruptcy, along with its restriction and stigma.
Creditors’ interests must be effectively secured under the proposed repayment plan. These debtors will commit to the repayment plan and settle their debts over a fixed period of not more than five years. The debtor will be liberated from his debts and given a fresh start if he meets his financial obligations under the Debt Repayment Scheme.
It is not possible to apply or sign up for the Debt Repayment Scheme because it is initiated when a bankruptcy application is filed against you in the High Court either by your creditor or yourself.
You must meet all of the following eligibility requirements:
i. Total liabilities do not exceed $150,000
Gainfully employed and earning a regular income
Not been a bankrupt or been on the DRS in the last five years
Not been subject to a court-based arrangement in the last five years
Not a sole proprietor or partner in any firm
Suppose you fail to meet any of the above criteria. In that case, you will be deemed ineligible for Debt Repayment Scheme, and the OA will not assess further.
Suppose the debtor does not comply with the terms of the Debt Repayment Scheme. In that case, the scheme fails, and creditors will be able to file a new bankruptcy petition.
For additional information, go to the Ministry of Law Insolvency Office - DRS webpage.
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