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WHAT IS BANKRUPTCY?
Bankruptcy is a process where the debtor is publicly recognized to be insolvent. The Court usually appoints the Official Receiver to administer the bankruptcy estate which includes selling of assets, registration of creditors’ claims and paying out dividends to his creditors.

HOW CAN A PERSON BE MADE INSOLVENT?
There are two types of insolvency:

1.Voluntary Insolvency
A debtor who is unable to pay his debts can apply for a Receiving Order (RO) to be made against himself. A “Debtor’s Petition” and a “Declaration of inability to pay” must be filed at the High Court.

2.Forced Insolvency 
A creditor may apply under a Creditor’s petition for a Receiving Order (and subsequently an Adjudication Order) to be made against a debtor where the debt owing to the petitioning creditor amounts to $500.

WHAT IS THE OFFICIAL RECEIVER’S ROLE?
The Official Receiver will take charge of your property and handle the Bankruptcy. You must co-operate with the Official Receiver or his Deputies in every way possible. After the Receiving Order (RO) or Adjudication Order (AO), creditors are required to deal only through the Official Receiver, which takes the pressure off you. If creditors contact you, refer them to the Official Receiver.

YOUR RIGHTS AND RESPONSIBILITIES AS AN INSOLVENT PERSON
a)Unsecured Creditors
Unsecured creditors cannot take further action to recover debts; but they may lodge “proof of debt” with the Official Receiver.

b) Secured Creditors 
Creditors who hold security over your assets can sell the assets and recover the money lent to you. They can then lodge a “Proof of Debt” at any shortfall. If the selling price exceeds the amount payable by you to the secured creditors, the difference will be paid to the Official Receiver.

WHAT HAPPENS TO SOMEONE WHO GUARANTEED MY DEBT? A creditor is not prevented from claiming under a guarantee and recovering payment from the guarantor.

WHAT HAPPENS TO SOMEONE WHO JOINTLY SIGNED A LOAN AGREEMENT WITH ME? He or she will still be liable for the total amount outstanding on all debts incurred in your joint names.

CAN A CREDITOR CONTACT ME AND INSIST ON PAYMENT ONCE THERE IS A RECEIVING ORDER AGAINST ME OR I AM BANKRUPT? No, the Bankruptcy Act stops creditors from recovering monies from you. An exception is a secured creditor with whom you have made arrangements to retain secured property as described above. If other creditors attempt to recover from you, tell them about your bankruptcy and advice them to prove their debts at the Official Receiver’s Chambers.

HOW WILL BANKRUPTCY AFFECT MY JOB?
Your bankruptcy might prevent you from getting or keeping employment in certain occupations or from holding various licences. You employer is not normally notified of your bankruptcy unless circumstances require him to be notified. 


WHAT IS A “STATEMENT OF AFFAIRS”?
Upon the making of a RO, you are required by law to complete and file a ‘statement of affairs’. This form will be furnished to you by the Official Receiver’s Chambers. You have to list your debts and your income/assets in the statement. You commit an offence if you make any material omission or misstatement relating to your affairs.

WHAT IS CREDITOR’S MEETING? 
The Official Receiver will call a Creditor’s Meeting upon the written request of a creditor. These meetings are usually held at the same time as the public Examination of the Debtor. The Creditors who have been listed in the filed “Statement of Affairs”, will be notified of the meeting. They are required to file a “Proof of Debt” before being allowed to attend the meeting. 
The meeting is called : 
  1. to consider and, if thought desirable, accept the offer of composition of full settlement of debts; 
  2. to pass an ordinary resolution to adjudge the debtor bankrupt.

WHAT IS A PUBLIC EXAMINATION OF DEBTOR? 
This examination is an investigation into your financial affairs and you are required to attend in person to answer questions posed to you.

DISABILITIES
  • Obtain Credit. When you, either alone or jointly with any other person, obtain credit to the extent of $100 or upwards from any person without first informing that person that you are an undischarged bankrupt, you commit an offence.
  • Operating a business. You can still operate a business while bankrupt. If you trade under a name other than that under which you are adjudged bankrupt, you have to disclose to anyone with whom you obtain credit your bankrupt status. Under Company Law, you cannot be a director of a company or be involved in its management without the permission of the Court.
  • Change of Address. You must, in writing, inform the Official Receiver of any change of your address.

ARE THERE ANY OFFENCES UNDER BANKRUPTCY LAW?
Yes. The most important are summarized below.
  • Disposing of property before bankruptcy with intent to defeat your creditor’s claims;
  • Failure to disclose assets;
  • Deliberately obtaining credit when you know you cannot pay;
  • Gambling and speculation which results in bankruptcy; 
  • Incurring debts during bankruptcy for over $100 without disclosing that you are bankrupt; 
  • Operating a business under an assumed name, without disclosing your real name and your bankruptcy.
To download the leaflet of this service: click Bankruptcy Leaflet PDF

To download the forms of this service: click Downloadable forms