Bankruptcy and CPF

[Commentator]

Appreciate if anyone can advise if banks can ask a bankrupt to pay using his CPF when he turn 55. Another thing if the bankrupt withdraw a large amt at 55, is he oblige to inform banks and therefore require to pay the banks with his CPF money.

 

[swalk21]

Nope. Cpf monies untouchable

 

[BBCWatcher]

Appreciate if anyone can advise if banks can ask a bankrupt to pay using his CPF when he turn 55.

You're asking a trick question.

Banks can ask. ("Please pay your debts now.") However, they don't have the legal right in Singapore to take those particular funds, however they are withdrawn.

Most other countries' laws do not shield foreign assets. If the CPF member decides to transfer CPF assets/payouts outside Singapore, all bets are off.

 

[Commentator]

Thank you for all replies. Much appreciated.

 

[testerjp]

Actually the qn wasn't answered.

Debtors can't touch the money when it's in your cpf account, but they will probably know that you had withdrawn lump sums from cpf or monthly payouts.

They may still have the right to get their money back.

Even if the amount successfully bequest to your heirs, they do have the means to trace and might get the money back before it goes to your heirs.

Since you had been bankrupt, it might be harder for you to migrate. Not sure if you can request the amount to be transferred overseas.

This is tricky

 

[BBCWatcher]

They may still have the right to get their money back.

Sorry, they do not -- that's not how the law works in Singapore.

The only legal creditor claim against withdrawn CPF funds is for new debt (if a creditor is so foolish to do that), incurred after the withdrawal. Also, an existing creditor may have previously decided not to pursue collection of the debtor's non-CPF (and other non-shielded) assets, as a gesture of goodwill or for whatever other reasons. The existing creditor might change their mind once the CPF member starts withdrawing CPF funds (subject to legal time limits and any binding relief agreements), but those particular funds are not legally touchable in Singapore.

Even if the amount successfully bequest to your heirs, they do have the means to trace and might get the money back before it goes to your heirs.

No, those funds cannot be touched in Singapore, not legally. And if you're worried about an extra-legal misappropriation, there's the Enhanced Nomination Scheme.

Not sure if you can request the amount to be transferred overseas.

As I wrote, other countries' laws are often different.(*) Once you transfer any legally protected funds out of Singapore, all bets are off.

(*) But other countries can have similar laws, within their own borders. As one example, in the State of Florida (U.S.) there's a "homestead law" that protects primary private residences from creditors and court judgments. O.J. Simpson, the famous ex-U.S. football player and actor, who was acquitted in criminal court but found guilty in civil court of murdering two people, personal benefits from the Florida homestead law. The well-known U.S. "401(k)" retirement accounts are also legally well protected in that country, and "IRAs" are in many (but not all) states.

 

[camholicx]

So what if I borrow huge amount of cash from bank and deposit into my CPF, thereafter declare bankrupt

 

[The_Davis]

So what if I borrow huge amount of cash from bank and deposit into my CPF, thereafter declare bankrupt

Hmm........ Are you trying to pull off a quick one here?

 

[testerjp]

It's a valid question but it's also good to know that withdrawn cpf money is untouchable.

 

[limster]

When you reach 55, you may withdraw your investments under the CPF Investment Scheme and any cash balance in your CPF Investment Account, after setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge and the current Medisave Minimum Sum in the Medisave Account. However, these withdrawn CPF savings will not be protected from claims by creditors or the Official Assignee.

https://www.areyouready.sg/YourLifeEvents/Pages/Bankruptcy-movingforwardwithlife.aspx

In response to TS question.

I used google, and clicked on links to official sources and found this on the first page of my google search. It seems to be saying that FRS/BRS is protected, but anything above that is not protected? I am not expert so can someone pls explain better?

 

[henrylbh]

For member who is an undischarged bankrupt, there are conditions for withdrawals and the amount that can be withdrawn for use.

Any moneys paid out of the Fund to that member —

(a) shall not be assignable, transferable, attached, sequestered or levied upon for or in respect of any debt or claim;

(b) shall not be subject to any set-off of any nature for any debt owing by that member;

(c) shall not pass to the Official Assignee; and

(d) shall be deemed not to form part of the property of that member.

 

[BBCWatcher]

So what if I borrow huge amount of cash from bank and deposit into my CPF, thereafter declare bankrupt

Yes, you can do that, and a few people do. Yes, that maneuver shields some assets from creditors and court judgments.

But your imagination is too limited. You can also top up your spouse's CPF and those of other family members such as your children's and parents'.

 

[limster]

When you reach 55, you may withdraw your investments under the CPF Investment Scheme and any cash balance in your CPF Investment Account, after setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge and the current Medisave Minimum Sum in the Medisave Account. However, these withdrawn CPF savings will not be protected from claims by creditors or the Official Assignee.

any expert can explain the last line?

 

[henrylbh]

When you reach 55, you may withdraw your investments under the CPF Investment Scheme and any cash balance in your CPF Investment Account, after setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge and the current Medisave Minimum Sum in the Medisave Account. However, these withdrawn CPF savings will not be protected from claims by creditors or the Official Assignee.

any expert can explain the last line?

The last line seems to contradict Section 27 of the CPF Act -

"Any moneys paid out of the Fund to that member —

(a) shall not be assignable, transferable, attached, sequestered or levied upon for or in respect of any debt or claim;

(b) shall not be subject to any set-off of any nature for any debt owing by that member;

(c) shall not pass to the Official Assignee; and

(d) shall be deemed not to form part of the property of that member"

 

[swalk21]

It means spend fast

 

[luckygal]

My close relative owes a bank a fair bit of money but he is overseas right now. No intention to pay back. No intention to come back except to visit his parents. How would he know if the bank has declared him bankrupt so that he would not risk coming back n be detained.

 

[sg_investor]

In Singapore do they practise father debt child pay back culture? Theoretically and practically?

 

[luckygal]

In Singapore do they practise father debt child pay back culture? Theoretically and practically?

Legally no I think

 

[cheongking888]

My close relative owes a bank a fair bit of money but he is overseas right now. No intention to pay back. No intention to come back except to visit his parents. How would he know if the bank has declared him bankrupt so that he would not risk coming back n be detained.

Before he is being made a bankrupt, OA will invite him to drink coffee and to list down his assets. If he refused to cooperate, nevermind, OA will not stop the bankruptcy proceedings.

Once the bankruptcy order is made, your relative better cooperate with the OA. If he still act like big f and travel outside SG without OA approval, good luck to him, once the OA takes action, Rolex oyster will be waiting for him when he clear the immigration.

 

[luckygal]

Before he is being made a bankrupt, OA will invite him to drink coffee and to list down his assets. If he refused to cooperate, nevermind, OA will not stop the bankruptcy proceedings.

Once the bankruptcy order is made, your relative better cooperate with the OA. If he still act like big f and travel outside SG without OA approval, good luck to him, once the OA takes action, Rolex oyster will be waiting for him when he clear the immigration.

The thing is he is already overseas. He knew he may be declared bankrupt anytime. He did not plan to come back to sg. But before declaring him a bankrupt, bank would issue letter right. Then his family can warn him upon receiving n he would not step foot into sg.