How to recover from being made bankrupt

We’ve previously written about what bankruptcy is and what it happens when you’re made bankrupt. In this post we’ll tell you how to get yourself back on the path to creditworthiness.

 

How to recover from being made bankrupt

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:

  1. leave the
    country
    (If you are found trying to do so without permission; your passport
    will be confiscated);
  2. form a
    business partnership or start a business
    ;
  3. manage a
    company;

  4. manage a
    business owned by relatives or a spouse
    ;
  5. 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.

What now?

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:

  1. 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.
  2. 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
    it.
  3. 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.

 

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