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Singapore Law Watch
5 days ago
- Business
- Singapore Law Watch
‘Consultants' luring debtors to borrow more to exploit government bankruptcy avoidance scheme
'Consultants' luring debtors to borrow more to exploit government bankruptcy avoidance scheme Source: Straits Times Article Date: 15 Jun 2025 Author: David Sun At least a dozen debt consultants have been touting their services on TikTok, encouraging debtors to apply for bankruptcy. TikTokers advertising themselves as debt consultants are charging debtors thousands of dollars to exploit a government bankruptcy avoidance scheme. Checks by The Straits Times showed that there are at least a dozen such consultants on the social media platform. One consultant said that for a fee, he can guide debtors through the Debt Repayment Scheme (DRS) to help them secure a discount on their debt. He said he had helped a client clear a debt of more than $100,000 with a repayment of only one-third of what he owed, or $35,000. 'That's $65,000 savings, no shiok meh? (sic),' the man added. ST understands such firms charge debtors between $1,000 and $5,000 for their services. Credit Counselling Singapore (CCS), a non-profit organisation and registered charity, said it has seen a number of debtors falling prey to exploitative debt consultancy firms. CCS general manager Tan Huey Min said it had a debtor who approached the organisation after he paid a consultancy firm in hopes of getting on the DRS. The man had debts of more than $150,000, above the threshold for the bankruptcy avoidance scheme. Ms Tan said that when the debtor was deemed ineligible for the scheme, the debt consultancy firm did nothing to help him. 'When these debtors go to some of these firms, they are told they have to first fork out several thousand for their services. 'They already have no money, where do you expect them to find a few thousand?' she said. 'What some of them have done is unethical, because they call themselves a consultancy firm, but they don't provide comprehensive information even though they claim to be professionals. 'Then you tell people about the DRS to lure them and get them to borrow even more money to pay you, encouraging them to be irresponsible. It is not right,' she added. The DRS is a pre-bankruptcy programme administered by the Ministry of Law (MinLaw) that the Government introduced in 2009. The voluntary scheme aims to help working debtors avoid bankruptcy, and help creditors get higher repayments than they would otherwise receive in the event of insolvency. Under the DRS, debtors with unsecured debts not exceeding $150,000 can enter a debt repayment plan of not more than five years and avoid bankruptcy. The structured repayment plan is under the supervision of an Official Assignee (OA), an officer of the court appointed by the Law Minister. When the debtor meets his financial obligations under the DRS, he will be released from his debts. MinLaw said on June 10 that it has noticed an increasing number of debtors engaging the services of consultancy firms that encourage debtors to self-petition for bankruptcy with the objective of being placed on the DRS. The ministry said this puts the debtor at risk of being pushed further into debt or being declared bankrupt, as they are not guaranteed to be eligible for the DRS. MinLaw data showed that 2,928 bankruptcy applications were filed by debtors in 2024. That represents 59 per cent of all applications made that year. It was the fifth consecutive year since 2020 that the number of self-filed applications was higher than applications by creditors. The firms are also encouraging debtors to borrow even more money from creditors to pay for their services, causing them to rack up more debt, MinLaw said. The ministry is proposing to make it an offence for debt consultancy firms to solicit for clients to file for bankruptcy, among other proposals. Not regulated Ms Tan noted that the MinLaw proposal would exempt professionals like lawyers and accountants and charities like CCS. This is because such entities are regulated. 'Debt consultancy firms are not regulated. They are profit-making (organisations), and may not be thinking about the best interests of debtors,' said Ms Tan. 'The DRS is meant for genuine debtors who are sincere but unable to make payments under their creditors' existing terms and conditions. It is not meant to be abused to circumvent making full repayment of debts.' Lawyer Tris Xavier, an associate director at Yuen Law, said there have been cases of debt consultancy firms filing proofs of debt against their own clients to claim money owed to them by these debtors. He said: 'We have seen some cases where the debt consultancy firms in question filed proofs of debt against the debtor, which dilutes the repayment to other legitimate creditors.' Mr Xavier said debtors do not receive proper advice from some debt consultancy firms. He added: 'There is a risk that the debtor might end up in bankruptcy. Individuals may also fail out of the DRS if they do not make regular payments, and might end up in bankruptcy anyway.' Debtors who file for bankruptcy on their own in the High Court have to pay $1,850 as a deposit. This will not be refunded if the application is successful. The High Court will then determine if these individuals should be referred to the OA, to be assessed for their suitability for the DRS. Debtors referred for the DRS have to pay preliminary fees of $600 for assessment and administrative costs. The consultants on TikTok falsely claim that a debtor can apply for the DRS 'to solve all the issues', with one even claiming the scheme could help settle their debts 'three times faster and save thousands of dollars'. Another claims '100% approval during application'. On its website, MinLaw says it is not possible to directly sign up or apply for the DRS. ST reached out to three debt consultancy firms, which said they are supportive of MinLaw's proposals but argued against a blanket rule for the industry. A spokesman for Viv Associates said: 'We do hope MinLaw will consider making room for selected debt consultancy firms, those with a strong compliance history and client care infrastructure, to be exempted from the blanket restriction. Ultimately, this is about protecting the public and preserving access to quality guidance. We believe that balance is possible and necessary.' Two of the firms contacted said that debtors are free to go ahead and file the paperwork themselves if they so wish. A spokesman for EDUdebt said: 'Our services exist for debtors who prefer professional support with their DRS documentation. We offer full transparency – and our fees only apply after the debtor independently decides to file for bankruptcy and is considered for DRS by the court.' Aside from making it unlawful for debt consultancy firms to solicit for business in such a manner, MinLaw is also making two other proposals. These are to add a new ground of failure for individuals who incur debts with no reasonable ground of expectation of being able to pay, and to impose a four-week time limit for creditors to file their proofs of debt under the DRS. Members of the public are invited to provide their feedback on the proposed key amendments after viewing the full consultation paper at Those who wish to submit their views and feedback may do so by June 27 at Source: The Straits Times © SPH Media Limited. Permission required for reproduction. Print
New Paper
6 days ago
- Business
- New Paper
'Consultants' luring debtors to borrow more to exploit government bankruptcy avoidance scheme
TikTokers advertising themselves as debt consultants are charging debtors thousands of dollars to exploit a government bankruptcy avoidance scheme. Checks by The Straits Times showed that there are at least a dozen such consultants on the social media platform. One consultant said that for a fee, he can guide debtors through the Debt Repayment Scheme (DRS) to help them secure a discount on their debt. He said he had helped a client clear a debt of more than $100,000 with a repayment of only one-third of what he owed, or $35,000. "That's $65,000 savings, no shiok meh? (sic)," the man added. ST understands such firms charge debtors between $1,000 and $5,000 for their services. Credit Counselling Singapore (CCS), a non-profit organisation and registered charity, said it has seen a number of debtors falling prey to exploitative debt consultancy firms. CCS general manager Tan Huey Min said it had a debtor who approached the organisation after he paid a consultancy firm in hopes of getting on the DRS. The man had debts of more than $150,000, above the threshold for the bankruptcy avoidance scheme. Ms Tan said that when the debtor was deemed ineligible for the scheme, the debt consultancy firm did nothing to help him. "When these debtors go to some of these firms, they are told they have to first fork out several thousand for their services. "They already have no money, where do you expect them to find a few thousand?" she said. "What some of them have done is unethical, because they call themselves a consultancy firm, but they don't provide comprehensive information even though they claim to be professionals. "Then you tell people about the DRS to lure them and get them to borrow even more money to pay you, encouraging them to be irresponsible. It is not right," she added. The DRS is a pre-bankruptcy programme administered by the Ministry of Law (MinLaw) that the Government introduced in 2009. The voluntary scheme aims to help working debtors avoid bankruptcy, and help creditors get higher repayments than they would otherwise receive in the event of insolvency. Under the DRS, debtors with unsecured debts not exceeding $150,000 can enter a debt repayment plan of not more than five years and avoid bankruptcy. The structured repayment plan is under the supervision of an Official Assignee (OA), an officer of the court appointed by the Law Minister. When the debtor meets his financial obligations under the DRS, he will be released from his debts. MinLaw said on June 10 that it has noticed an increasing number of debtors engaging the services of consultancy firms that encourage debtors to self-petition for bankruptcy with the objective of being placed on the DRS. The ministry said this puts the debtor at risk of being pushed further into debt or being declared bankrupt, as they are not guaranteed to be eligible for the DRS. MinLaw data showed that 2,928 bankruptcy applications were filed by debtors in 2024. That represents 59 per cent of all applications made that year. It was the fifth consecutive year since 2020 that the number of self-filed applications was higher than applications by creditors. The firms are also encouraging debtors to borrow even more money from creditors to pay for their services, causing them to rack up more debt, MinLaw said. The ministry is proposing to make it an offence for debt consultancy firms to solicit for clients to file for bankruptcy, among other proposals. MinLaw has noticed an increasing number of debtors engaging the services of consultancy firms that encourage debtors to self-petition for bankruptcy with the objective of being placed on the DRS. PHOTO: SCREENGRAB FROM TIKTOK Not regulated Ms Tan noted that the MinLaw proposal would exempt professionals like lawyers and accountants and charities like CCS. This is because such entities are regulated. "Debt consultancy firms are not regulated. They are profit-making (organisations), and may not be thinking about the best interests of debtors," said Ms Tan. "The DRS is meant for genuine debtors who are sincere but unable to make payments under their creditors' existing terms and conditions. It is not meant to be abused to circumvent making full repayment of debts." Lawyer Tris Xavier, an associate director at Yuen Law, said there have been cases of debt consultancy firms filing proofs of debt against their own clients to claim money owed to them by these debtors. He said: "We have seen some cases where the debt consultancy firms in question filed proofs of debt against the debtor, which dilutes the repayment to other legitimate creditors." Mr Xavier said debtors do not receive proper advice from some debt consultancy firms. He added: "There is a risk that the debtor might end up in bankruptcy. Individuals may also fail out of the DRS if they do not make regular payments, and might end up in bankruptcy anyway." Debtors who file for bankruptcy on their own in the High Court have to pay $1,850 as a deposit. This will not be refunded if the application is successful. The High Court will then determine if these individuals should be referred to the OA, to be assessed for their suitability for the DRS. Debtors referred for the DRS have to pay preliminary fees of $600 for assessment and administrative costs. Some debt consultants falsely claim that a debtor can apply for the DRS "to solve all the issues". PHOTO: SCREENGRAB FROM TIKTOK The consultants on TikTok falsely claim that a debtor can apply for the DRS "to solve all the issues", with one even claiming the scheme could help settle their debts "three times faster and save thousands of dollars". Another claims "100% approval during application". On its website, MinLaw says it is not possible to directly sign up or apply for the DRS. ST reached out to three debt consultancy firms, which said they are supportive of MinLaw's proposals but argued against a blanket rule for the industry. A spokesman for Viv Associates said: "We do hope MinLaw will consider making room for selected debt consultancy firms, those with a strong compliance history and client care infrastructure, to be exempted from the blanket restriction. Ultimately, this is about protecting the public and preserving access to quality guidance. We believe that balance is possible and necessary." Two of the firms contacted said that debtors are free to go ahead and file the paperwork themselves if they so wish. A spokesman for EDUdebt said: "Our services exist for debtors who prefer professional support with their DRS documentation. We offer full transparency - and our fees only apply after the debtor independently decides to file for bankruptcy and is considered for DRS by the court." ST understands such firms charge debtors between $1,000 and $5,000 for their services. PHOTO: SCREENGRAB FROM TIKTOK Aside from making it unlawful for debt consultancy firms to solicit for business in such a manner, MinLaw is also making two other proposals. These are to add a new ground of failure for individuals who incur debts with no reasonable ground of expectation of being able to pay, and to impose a four-week time limit for creditors to file their proofs of debt under the DRS. Members of the public are invited to provide their feedback on the proposed key amendments after viewing the full consultation paper at Those who wish to submit their views and feedback may do so by June 27 at
Online Citizen
6 days ago
- Business
- Online Citizen
Authorities to criminalise firms soliciting bankruptcy filings to exploit debt relief scheme
SINGAPORE: The Ministry of Law (MinLaw) has proposed legal amendments to prevent abuse of the Debt Repayment Scheme (DRS), a bankruptcy alternative for individuals with smaller debts. The move targets consultancy firms that allegedly encourage debtors to borrow money and self-petition for bankruptcy solely to qualify for the DRS. On 9 June 2025, MinLaw announced plans to introduce a new offence under the Insolvency, Restructuring and Dissolution Act (IRDA). This offence will criminalise the solicitation of bankruptcy applications by businesses. The proposed punishment includes a fine of up to S$10,000, imprisonment for up to three years, or both. Regulated professionals such as lawyers, accountants, and financial advisers—as well as recognised charitable entities—will be exempted from the law. The DRS was introduced in 2009 in response to financial challenges faced during the Great Recession. It offers wage-earning debtors with unsecured debts not exceeding S$150,000 a way to repay creditors under a structured plan lasting no more than five years. According to MinLaw, an increasing number of debtors are engaging consultancy firms that charge substantial fees and encourage clients to incur additional debt to fund these services. These practices have led to a rise in debtor-initiated bankruptcy filings. The Straits Times reported in March that in 2024, 2,928 out of all bankruptcy applications—or 59 percent—were filed by debtors themselves. MinLaw has expressed concern that many such filings are motivated not by genuine financial distress but by attempts to obtain a partial discharge of debts under the DRS. Under current law, debtors must file for bankruptcy to be considered for the scheme. However, the ministry emphasised that the scheme was never intended for abuse. In addition to the new criminal offence, MinLaw is proposing two further grounds under which debtors may be deemed unsuitable for the DRS. The first is the failure to pay the preliminary fees totalling S$600, which are required to cover administrative costs borne by the Official Assignee (OA), the officer overseeing the scheme. The second is where a debtor incurs debt with no reasonable expectation of repayment—particularly within 12 months prior to a bankruptcy application. This aims to address cases where individuals take on new loans shortly before applying for the DRS, effectively using the scheme to bypass full repayment. MinLaw is also proposing to designate this same behaviour—incurring debt without a reasonable expectation of repayment—as a ground for failure of the DRS, even after a debtor has been accepted into the scheme. This would empower the OA to terminate repayment plans and issue a Certificate of Failure, allowing creditors to commence bankruptcy proceedings. To enhance administrative efficiency, a new statutory four-week deadline for creditors to file proofs of debt is also proposed. At present, delays in creditor submissions can disrupt the planning and implementation of repayment arrangements, particularly if new claims exceed the S$150,000 threshold. Under the changes, creditors who miss the deadline may still request an extension, but must provide a valid reason. Those who fail to file on time without justification will forfeit claims after a debtor successfully completes the plan. These proposed legislative amendments follow a previous review of the DRS in 2016, which raised the debt threshold from S$100,000 to S$150,000. Other minor procedural updates are also proposed, including changes to appeal procedures and timelines, and clarification of existing statutory provisions. MinLaw is inviting public feedback on the proposals through an online consultation portal. Submissions are open until 27 June 2025. The ministry said the proposed changes are aimed at preserving the integrity of the DRS while ensuring that both debtor rehabilitation and creditor interests remain balanced and protected.
Yahoo
6 days ago
- Business
- Yahoo
MinLaw to propose laws targeting debt consultancy firms exploiting debt repayment scheme
SINGAPORE – Laws around a scheme to help individuals avoid insolvency may be tightened, with the authorities targeting firms that encourage individuals to borrow money and file for bankruptcy to get a discount off their debts. These consultancy firms are looking to abuse the Debt Repayment Scheme (DRS), a pre-bankruptcy scheme administered by the Ministry of Law (MinLaw). On June 9, MinLaw said there has been an increasing number of debtors engaging the services of consultancy firms, which encourage debtors to self-petition for bankruptcy with the objective of being placed on the DRS. 'This is done not with the intention of being adjudged a bankrupt, but with the intention of abusing the DRS to obtain a discount off their debts,' the ministry said. A debtor can avoid being made bankrupt if he is put on the DRS, but he must file for bankruptcy first before being considered for the scheme. MinLaw said that the consultancy firms are charging debtors sizeable fees and encouraging them to borrow money from creditors to pay for their services. 'Due in part to this trend, there has been an increase in the number of debtor-initiated bankruptcy applications, where debtors borrow irresponsibly to pay for such consultancy firms' services in helping them apply for bankruptcy,' MinLaw said. The Straits Times reported in March that more than half of the bankruptcy applications in 2024 were made by the debtors themselves – the fifth consecutive year since 2020 that the number of self-filed applications was higher than applications by creditors. MinLaw data showed that 2,928 bankruptcy applications were filed by debtors in 2024. That represents 59 per cent of all applications made that year. The DRS is a voluntary, debtor-driven scheme intended to help wage-earning debtors with relatively small debts avoid bankruptcy while helping creditors receive higher repayments than they would otherwise receive in the event of insolvency. Under the DRS, debtors with unsecured debts not exceeding $150,000 can enter a debt repayment plan over a fixed period of not more than five years with their creditors and avoid bankruptcy. When the debtor meets his financial obligations under the DRS, he will be released from his debts. MinLaw said it noticed an increasing number of debtors engaging the services of consultancy firms that encourage debtors to self-petition for bankruptcy with the objective of being placed on the DRS. To address the issue, the ministry is proposing a new law that will make it a crime for businesses to solicit and canvass any person to make a bankruptcy application. Regulated professionals, in particular lawyers, accountants and financial advisers, as well as charitable entities that are institutions of a public character, will be exempted. The offence will be punishable with a $10,000 fine or three years' jail, or both. The DRS was introduced in 2009 as people grappled with the 2008 financial crisis and the Great Recession, which caused many to lose their jobs and take pay cuts. It began with a debt threshold of $100,000, but this was increased to the current $150,000 in 2020 following a review in 2016. Under the scheme, debtors make repayments of their debt by following a structured repayment plan under the supervision of the Official Assignee (OA), an officer of the court appointed by the Law Minister. MinLaw said that as part of a review of the scheme, it is also looking to add two new grounds of unsuitability for the DRS. They include the failure to pay the preliminary fees and incurring of debts with no reasonable ground of expectation of being able to pay. Debtors who are referred to the OA to be assessed for their suitability for the DRS are required to pay preliminary fees totalling $600. In addition, MinLaw is also looking to add as a new ground of failure individuals who incur debts with no reasonable ground of expectation of being able to pay, and imposing a four-week time limit for creditors to file their proofs of debt under the DRS. Members of the public are invited to provide their feedback on the proposed key amendments after viewing the full consultation paper at Those who wish to submit their views and feedback may do so by June 27 at Source: The Straits Times © SPH Media Limited. Permission required for reproduction Discover how to enjoy other premium articles here
AsiaOne
7 days ago
- Business
- AsiaOne
'Consultants' luring debtors to borrow more to exploit government bankruptcy avoidance scheme, Singapore News
SINGAPORE - TikTokers advertising themselves as debt consultants are charging debtors thousands of dollars to exploit a government bankruptcy avoidance scheme. Checks by The Straits Times showed that there are at least a dozen such consultants on the social media platform. One consultant said that for a fee, he can guide debtors through the Debt Repayment Scheme (DRS) to help them secure a discount on their debt. He said he had helped a client clear a debt of more than $100,000 with a repayment of only one-third of what he owed, or $35,000. "That's $65,000 savings, no shiok meh? (sic)," the man added. ST understands such firms charge debtors between $1,000 and $5,000 for their services. Credit Counselling Singapore (CCS), a non-profit organisation and registered charity, said it has seen a number of debtors falling prey to exploitative debt consultancy firms. CCS general manager Tan Huey Min said it had a debtor who approached the organisation after he paid a consultancy firm in hopes of getting on the DRS. The man had debts of more than $150,000, above the threshold for the bankruptcy avoidance scheme. Ms Tan said that when the debtor was deemed ineligible for the scheme, the debt consultancy firm did nothing to help him. "When these debtors go to some of these firms, they are told they have to first fork out several thousand for their services. "They already have no money, where do you expect them to find a few thousand?" she said. "What some of them have done is unethical, because they call themselves a consultancy firm, but they don't provide comprehensive information even though they claim to be professionals. "Then you tell people about the DRS to lure them and get them to borrow even more money to pay you, encouraging them to be irresponsible. It is not right," she added. The DRS is a pre-bankruptcy programme administered by the Ministry of Law (MinLaw) that the Government introduced in 2009. The voluntary scheme aims to help working debtors avoid bankruptcy, and help creditors get higher repayments than they would otherwise receive in the event of insolvency. Under the DRS, debtors with unsecured debts not exceeding $150,000 can enter a debt repayment plan of not more than five years and avoid bankruptcy. The structured repayment plan is under the supervision of an Official Assignee (OA), an officer of the court appointed by the Law Minister. When the debtor meets his financial obligations under the DRS, he will be released from his debts. MinLaw said on June 10 that it has noticed an increasing number of debtors engaging the services of consultancy firms that encourage debtors to self-petition for bankruptcy with the objective of being placed on the DRS. The ministry said this puts the debtor at risk of being pushed further into debt or being declared bankrupt, as they are not guaranteed to be eligible for the DRS. MinLaw data showed that 2,928 bankruptcy applications were filed by debtors in 2024. That represents 59 per cent of all applications made that year. It was the fifth consecutive year since 2020 that the number of self-filed applications was higher than applications by creditors. The firms are also encouraging debtors to borrow even more money from creditors to pay for their services, causing them to rack up more debt, MinLaw said. The ministry is proposing to make it an offence for debt consultancy firms to solicit for clients to file for bankruptcy, among other proposals. Not regulated Ms Tan noted that the MinLaw proposal would exempt professionals like lawyers and accountants and charities like CCS. This is because such entities are regulated. "Debt consultancy firms are not regulated. They are profit-making (organisations), and may not be thinking about the best interests of debtors," said Ms Tan. "The DRS is meant for genuine debtors who are sincere but unable to make payments under their creditors' existing terms and conditions. It is not meant to be abused to circumvent making full repayment of debts." Lawyer Tris Xavier, an associate director at Yuen Law, said there have been cases of debt consultancy firms filing proofs of debt against their own clients to claim money owed to them by these debtors. He said: "We have seen some cases where the debt consultancy firms in question filed proofs of debt against the debtor, which dilutes the repayment to other legitimate creditors." Mr Xavier said debtors do not receive proper advice from some debt consultancy firms. He added: "There is a risk that the debtor might end up in bankruptcy. Individuals may also fail out of the DRS if they do not make regular payments, and might end up in bankruptcy anyway." Debtors who file for bankruptcy on their own in the High Court have to pay $1,850 as a deposit. This will not be refunded if the application is successful. The High Court will then determine if these individuals should be referred to the OA, to be assessed for their suitability for the DRS. Debtors referred for the DRS have to pay preliminary fees of $600 for assessment and administrative costs. The consultants on TikTok falsely claim that a debtor can apply for the DRS "to solve all the issues", with one even claiming the scheme could help settle their debts "three times faster and save thousands of dollars". Another claims "100 per cent approval during application". On its website, MinLaw says it is not possible to directly sign up or apply for the DRS. [[nid:492403]] ST reached out to three debt consultancy firms, which said they are supportive of MinLaw's proposals but argued against a blanket rule for the industry. A spokesman for Viv Associates said: "We do hope MinLaw will consider making room for selected debt consultancy firms, those with a strong compliance history and client care infrastructure, to be exempted from the blanket restriction. Ultimately, this is about protecting the public and preserving access to quality guidance. We believe that balance is possible and necessary." Two of the firms contacted said that debtors are free to go ahead and file the paperwork themselves if they so wish. A spokesman for EDUdebt said: "Our services exist for debtors who prefer professional support with their DRS documentation. We offer full transparency - and our fees only apply after the debtor independently decides to file for bankruptcy and is considered for DRS by the court." Aside from making it unlawful for debt consultancy firms to solicit for business in such a manner, MinLaw is also making two other proposals. These are to add a new ground of failure for individuals who incur debts with no reasonable ground of expectation of being able to pay, and to impose a four-week time limit for creditors to file their proofs of debt under the DRS. Members of the public are invited to provide their feedback on the proposed key amendments after viewing the full consultation paper at Those who wish to submit their views and feedback may do so by June 27 at This article was first published in The Straits Times . Permission required for reproduction.
