More people declared bankrupt

More people declared bankrupt

SINGAPORE - After seven years during which it fell steadily, the number of people made bankrupt swung upwards again last year.

While the strong economy and a debt repayment scheme helped push individual bankruptcy orders down from a peak of 4,553 in 2004 to a low of 1,527 in 2011, the orders rose by 14.5 per cent to 1,748 last year.

No reasons were given by the Insolvency and Public Trustee's Office (IPTO) for the increase, but financial advisers, lawyers and counsellors who deal with bankrupts had some ideas about it.

More people might be finding it hard to keep up with their expenses even though they have jobs, as inflation has soared in recent years. Working-class families might turn to credit cards to get by and find themselves in trouble when they cannot pay what they owe.

A typical example is a renovation contractor counselled by Mr Leong Sze Hian, past president of the Society of Financial Service Professionals. The man in his 30s was made bankrupt for charging $6,000 to credit cards "to make ends meet" as he had an irregular income. He went under when his debt snowballed to more than $10,000.

Also, given the solid economy and sizzling property market of late, more Singaporeans may be feeling flush and spending beyond their means, said Credit Counselling Singapore's president Kuo How Nam.

More people may also be getting into gambling debt, especially with the opening of the two casinos in 2010, counsellors noted. There are signs that increasing numbers may be in financial distress.

One is the burgeoning amount on rollover credit card balances - the amount unpaid which usually incurs interest of 24 per cent per annum - which shot up by almost 50 per cent from $3.4 billion in 2008 to $5 billion last year.

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