In the event of financial difficulties and the need to apply for bankruptcy, it will cause many inconveniences and serious consequences to the bankrupt’s life. Once the bankruptcy procedure is completed and the court formally issues a bankruptcy order, the bankruptcy’s assets and life will be restricted. This article synthesizes information about bankruptcy to provide readers with an understanding of the negative effects that individuals may face after bankruptcy.
How is personal bankruptcy legally defined?
In one sentence, bankruptcy is a legal process to declare a person insolvent to creditors.
According to Hong Kong’s Bankruptcy Ordinance, the main purpose of bankruptcy is to “collect and realize all the assets of the bankrupt” and distribute them to creditors, or, because the reasons for insolvency have been investigated, to punish those who violate the provisions of the bankruptcy law. bankrupt.
What restrictions will the bankrupt be subject to?
During the period from the issuance of the bankruptcy order to the whole period of bankruptcy, the bankrupt must cooperate fully with the Official Receiver’s Office, transfer his assets for realization, and also need to provide information on debts, financial transactions, etc. The following are the restrictions that the bankrupt will be subject to:
After the bankruptcy order is issued,
• The Official Receiver will be the provisional trustee and may appoint any qualified person to act as the provisional trustee if the value of the debtor’s assets does not exceed $200,000;
• The bankrupt must meet with the trustee on a specified date to hand over all assets to the trustee;
• All assets of the bankrupt (including overseas) belong to the trustee and must be collected and sold, and the proceeds are distributed to the creditors. Dissolving the bankruptcy does not return the assets to the bankrupt;
• A monthly income and expense assessment form is required;
• Must attend all creditors’ meetings;
• Contributions to the estate in bankruptcy are deducted from personal income in accordance with the provisional trustee’s assessment;
• Proceedings against the assets of the bankrupt shall not proceed without the leave of the court;
• The court can investigate the bankrupt’s debts, prosecute violators, etc.
How does bankruptcy affect your life?
Once the bankruptcy petition is passed and the bankruptcy order is issued, the debtor is limited in his daily life or spending. Unless there is a good reason, the bankrupt cannot have excessively expensive and extravagant consumption. The Official Receiver’s Office also has the opportunity to send staff to the bankrupt’s premises to conduct inspections. Violators may be subject to criminal prosecution.
The following are the effects of bankruptcy on daily life, and generally not unless there is a good reason:
• must stop using credit cards, accounts with banks, and other financial institutions (you can only open a savings account with the trustee’s permission);
• Inability to obtain further credit (for borrowings of $100 or more, bankrupt must disclose bankrupt status);
• You cannot buy luxury goods such as furniture, watches, and paintings.
• Live life as simple as possible, such as not taking taxis, or buying designer clothes.
• Can’t buy a car, buy a house or buy a house;
• cannot invest in funds;
• cannot contribute to life or savings insurance that was signed prior to bankruptcy;
• You cannot travel at your own expense (the trustee must be notified every time you leave the country, and the itinerary must be clearly explained);
• Not to work in the following professions: lawyers, estate agents, insurance agents, and securities dealers or directors of limited companies
The above information is for reference only. If you have any questions about accounting, company bankruptcy, or liquidation, we welcome your inquiries.