Bankruptcy

If you are unable to pay your debts, and your attempts to come to an agreement with your creditors about repayment have failed, then you may be faced with the prospect of declaring bankruptcy.

Bankruptcy is a legal process where you are declared unable to pay your debts. If you enter bankruptcy yourself voluntarily, it is referred to as a debtor's petition, but you will have to be insolvent (unable to pay your debts when they are due). You can also be made bankrupt by one of your creditors through a court process which is called a creditor's petition.

What Does it Mean to Declare Bankruptcy?
Declaring yourself bankrupt involves having a Trustee appointed to take control of your assets and income so that they can pay down your debts and discharge them. But before you consider declaring bankruptcy, you must clearly understand the consequences, as it will have serious repercussions for your future.

What are the Consequences of Being Bankrupt?
There are several consequences of becoming bankrupt which you need to seriously consider before you apply to be bankrupted.

• Length of bankruptcy - You will usually be considered "currently bankrupt" for three years and one day from the day you file your statement of affairs. However, in some cases, trustees can lodge an objection to end your bankruptcy and have it extended for up to eight years.

• Income - If you earn over a certain amount, you will need to make compulsory payments to your trustees. This amount changes depending on how many dependants you have.

• Assets - Your trustee is able to sell your assets such as real estate, vehicles, bank balances, tools and lottery winnings. You also need to declare any items you apply for and receive during bankruptcy.

• Overseas travel - If you want to travel overseas while you are bankrupt you need to submit an application to your trustee. Your trustee does not have to approve your travel and can place restrictions on your travel.

An understanding of the Bankruptcy Laws, along with expert legal advice is important to allow you to make an informed decision about your financial situation Straits Lawyers are now offering online services in both English and Chinese.

Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.