If you’ve been made bankrupt, you probably already know the ugly truth. But if you were thinking of it as a quick way out of a sticky financial situation: think again.
Bankruptcy can be serious and it can follow you to the end
of your days. Previously we wrote about what it means to be bankrupt and how bankruptcy can happen to you without you even knowing it
Today we'll tell you about the
consequences of being bankrupt and let you know what you should do to get back on the path to good personal finance management and recover your credit rating.
The consequences of bankruptcy
Besides having all your assets surrendered to the Director General of Insolvency (DGI) (as mentioned in Part 1); there are other consequences to becoming bankrupt.
You won’t be able to:
- leave the
country (If you are found trying to do so without permission; your passport
will be confiscated);
- form a
business partnership or start a business;
- manage a
- manage a
business owned by relatives or a spouse ;
- bring an action in court, unless it relates to personal injury.
In instances 1-5, the bankrupt can request for permission from the DGI or the court and if allowed, he will be able to do as permitted.
- The bankrupt will also have to:
- report any change of address to the DGI;
- give an account of all property and monies
received by him to the DGI every six months;
- surrender all property and monies to the DGI as
stated in the account
- immediately report to the DGI if he receives property or monies worth more than RM500 that isn’t part of his usual income.
These are some of the consequences you can expect which is found stated in the Bankruptcy Act but there are other pitfalls. If you’ve been declared bankrupt; until you repay; you won’t be able to secure any further funding for the purchase of properties. Job-hunting will also be difficult as companies do have policies against the hiring of bankrupts. Most large corporations will do bankruptcy checks before agreeing to take you on.
No doubt bankruptcy is serious but it is such a seasoned occurrence that there is always help on hand. Bankruptcy lawyers are available to help as are the officers at the insolvency department. But these are some best practices:
- If the debt is genuine; seek to repay with
whatever means you can. Although it is not ideal, seeking help from relatives
or loved ones is better than leaving the debt unpaid and the DGI constantly
monitoring your affairs.
- If the debt has occurred through no fault of
your own (perhaps a property developer who absconded or a wrongfully approved
loan you did not apply for); contest the decision as soon as you find out about
- Do not take bankruptcy lightly as a means of avoiding your creditors. If you are having problems repaying loans; contact the Debt Management and Counselling Agency ( AKPK) before filing for bankruptcy.
Bankruptcy can be avoided through right steps but if you have found yourself caught; continue repaying your debts and do as instructed by the DGI and you’ll be cleared without hitch.
The above article was written with the advice of bankruptcy lawyer, Shamalah Selvarajah; a partner at Messrs Bodipalar Ponnudurai De Silva.