1 Mar 2006 Posted in Parliamentary speeches and responses
Member Ms Indranee Rajah spoke about the instances where people who are in need of legal aid will not be able to qualify under our current criteria. I need to put matters into context. The approach of looking at the disposable income over the past twelve months is an approach which is used in other jurisdictions also.
Furthermore, in the past three years, at least 90% of applicants for legal aid have satisfied the means test. In the first 10 months of FY2005, this figure went up to 94%. It shows that there are only a small number of people who do not meet the financial eligibility criteria for legal aid.
However, I am sympathetic to the MP’s point, which is that we may come across some cases from time to time which may be deserving of legal aid but because of the provisions and the criteria they may not be able to receive legal aid from the Legal Aid Bureau. From the figures I gave, the system and means test is working. What the MP is really arguing for is some flexibility in the system to deal with such cases.
I will discuss with the Director of Legal Aid to examine how we can adjust the system, in order to provide for some flexibility or discretion in dealing with real hardship cases, for example, where the person has lost his job and is facing civil actions, but whose past income falls outside the criteria. We will look at giving some flexibility without radically changing the overall system.
I should add that those who do not satisfy the means test are not really left without recourse. The Legal Aid Bureau does refer them to the many other avenues for receiving legal assistance such as the many free legal clinics that are run by voluntary groups elsewhere in Singapore.
On the second issue whether the Government will consider extending legal aid to criminal cases, in the limited time we have today I do not want to go into details. This has been explained in this House in the past on several occasions, as to why the State cannot on the one hand expend resources in having an excellent Attorney-General’s Chambers and prosecution system, who are selective in prosecution, and at the same time to also expend State resources to defend those who are being prosecuted by the Attorney-General’s Chambers. But this is a fine argument that can be debated.
Having said that, I have personally encouraged the Law Society to develop their Criminal Legal Aid Scheme further and I have also personally given support to them in fund-raising efforts over the years. I will continue to do so. If the Honourable Member feels strongly about the Government’s position this issue, except for capital cases where of course we provide legal assistance, she can pursue it with a question for oral answer.
- Let me first deal with the request for information on the trends of bankruptcy.
Bankruptcy Petitions and Orders Down
- The fact is that the numbers came down. In 2005, there were 4,078 bankruptcy petitions. This was a drop of about 20% compared to the previous year. Correspondingly, the number of bankruptcy orders by the High Court has also decreased to 3,542 in 2005, a drop of about 22% compared to 2004.
Profile of bankrupts
- Now I was asked about the profile of bankrupts.
- The majority are in the age range of 41-50 year. The second highest group is in the age range of 31-40 year. The age group of 41-50 year accounts for almost 40% of new bankrupts in 2004 and 2005.
- I was asked about self-petitions. Most were made bankrupt by their creditors. I am glad to say the self-petitioned cases are a very small percentage at 4.3% in 2004 and it came down to 2.7% in 2005.
- Of the self-petitioned cases in 2005, bankrupts in the age group of 31-40 year account for 46%.
- The main cause of insolvency cited by non-business related bankrupts including in self-petition cases is really credit card debts. Other causes included default in payment of other credit facilities, losses incurred from speculation, suffering from ill health and standing as guarantor for various loans and situations.
Self-Petition Case Management Team
- Dr Maliki asked for an update on the Self-Petition Management Team set up by the Official Assignee. I am glad to say that through the efforts of this Team, the number of self-petition cases has dropped in the past year. In terms of absolute numbers, the number of self-petitioned cases dropped by 33% from 941 cases in 2004 to 632 cases in 2005.
- I was also asked about what we are doing about younger people. As a percentage of all new bankrupts, the number from the 21-30 year age group has risen marginally from 9.4% in 2004 to 9.9% in last year. To ensure that young people can manage their personal finances, the Insolvency & Public Trustee’s Office has recently set up, with higher institutions of learning like the Singapore Polytechnic, to organise Consumer Education Talks and the objective of these talks is to create awareness and promote the importance of financial planning.
Success rate of the Pre-bankruptcy and Mediation Centre
- I was asked about the pre-bankruptcy efforts and the success rate of the Pre-bankruptcy and Mediation Centre.
- In 2005 alone, about 2,100 debtors turned to the Centre for information and advice. They also handled 15 mediation cases, of which 4 were successfully resolved to the satisfaction of both the debtors and creditors.
Wage Reorganization Plan
- I was asked if there is any mechanism for negotiation between debtors and creditors in place and Dr Maliki also asked if the Centre could do more and whether we could pay more attention to the plight of bankrupts in the middle-income group.
- In addition to the efforts by the Centre, let me touch on a recommendation by the Omnibus Insolvency Legislation Committee which I spoke about last year.
- The Committee found that our current bankruptcy regime does not provide sufficient avenues for the debtor to negotiate a settlement with his creditors to avoid bankruptcy.
- The Committee has recommended a simpler pre-bankruptcy procedure for the individual debtor who is capable of repaying his debts. They identified Chapter 13 of the United States Bankruptcy Code as a workable model. It provides a framework for reorganization proceedings to allow individual debtors to enter into repayment plans with creditors to pay off their debts over a few years.
- The Committee now recommends a Wage Reorganization Scheme that is based on the US Chapter 13 with some modifications to meet our local needs.
- The trigger point for the Scheme would be when a Statutory Demand is served on the debtor by one of his creditors or when the debtor self-petitions for bankruptcy. If the Statutory Demand is not complied with nor set aside within 21 days, the debtor must enter into a Wage Reorganization Scheme. A debtor who intends to petition for his own bankruptcy will also be subjected to the Wage Reorganization Scheme. Under the Scheme, the debtor must complete his repayment plan within 3 to 5 years. When the payments under the plan have been completed, the debtor will be released from his obligations under the plan.
- My Ministry is now studying this recommendation and consulting some stakeholders to see if such a Scheme can work in cases where, for example, the size of the debts are within practical limits for wage earners, such as $100,000 and below.
- I think if the Scheme works, it will achieve a win-win outcome for both debtors and creditors. A debtor will be able to stave off consequences of bankruptcy, more likely to remain in gainful employment, and thus be in a better position to repay his debts. It will also benefit the creditors who can then recover more of the debt which would otherwise have to be written off.
Last updated on 23 Nov 2012