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.
 
• 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.
 
• 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
 
1)    Unsecured Creditors
Unsecured creditors cannot take further action to recover debts; but they may lodge “Proof of Debt” with the Official Receiver.
 
2)     Secured Creditors
Creditors who hold security over your assets can sell the assets and recover the money lent to you. They can then deduct the selling price from the amount owed to the secured creditor.
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/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 money 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 advise them to prove the debts at the Official Receiver’s Chambers.