Exemption of Bankrupt Persons' Income from Creditors' Claims for Use in Insurance Premium Payments for Home Protection and CPF Insurance Schemes

Mr Gan Thiam Poh asked the Minister for Law whether the income of bankrupt persons can be exempt from creditors' claims and be used in priority for the payment of insurance premiums such as that of HDB's Home Protection Scheme and all CPF insurance schemes to protect the bankrupt and his family.

After a Bankruptcy Order is made, a bankrupt has to make monthly contributions to his bankruptcy estate during the period of the bankruptcy. The bankruptcy estate will then be distributed to the creditor(s) upon the bankrupt's discharge.

In determining the monthly contribution, the Official Assignee (OA) or the Private Trustees-in-Bankruptcy take into consideration the bankrupt's current income, relevant work experience and age, as well as reasonable expenses which the bankrupt and his family may incur. In general, a monthly personal deductible of $1,100 is allowed, and additional deductibles may be allowed depending on the bankrupt's specific circumstances. These deductibles can be used to pay for the insurance premiums for the Home Protection Scheme and other CPF insurance schemes so as to protect the bankrupt and his family. Where allowed by CPF rules, CPF members can also use their CPF contributions and savings to pay for these insurance premiums.