Bankruptcy is a common fear among Singaporeans. With high costs of food, housing, and healthcare, the dreaded “B” word is on many minds. But most of what we imagine are just myths, and hopefully this will put your mind at ease:

Will I go bankrupt the moment I cannot repay my loans?

Bankruptcy is a legal status that is granted by the High Court if you owe at least S$10,000. Either the debtor or the creditor may file for bankruptcy. You cannot be declared (or self-declare) bankruptcy for small debts of a few thousand dollars.

Even if you owe S$10,000 or more, you are not always immediately declared a bankrupt. Organisations such as Credit Counselling Singapore can mediate between you and your creditors, to work out a repayment plan without an official declaration of bankruptcy. This is beneficial to both parties, as your creditors will probably get back more …