What restrictions does a bankrupt have?

Bankruptcy Law in Malaysia
Published on 3/5/2009, 11:40 PM by Jamie Sc

Let’s begin by defining what bankruptcy is, it is basically a way to deal with the debts that you are unable to settle and when they fall due. The bankruptcy proceedings will then allow you to free yourself from the excessive debts that will result in allowing you to make a fresh start. However there of course would be a few restrictions to ensure that your assets are shared out in order to repay the creditors. So basically a person that has been judged by a law of court to be unable to pay their debts as they fall due is known as a bankrupt. Anyone can become a bankrupt and this includes members of a partnership.

What is the significance of the bankruptcy law?

The bankruptcy laws will provide for the development for a plan that will allow the debtor who is unable to settle their debts, so instead they will pay through the division of their assets among the creditors. So under the supervised division, the interests of all the creditors will then be treated with some measure of equality. The courts would also need to take into account the existence of companies that have been operating within the jurisdiction that have unfortunately have become insolvent. The bankruptcy law in Malaysia is based on that of the English law.

Lots of businesses and people go bankrupt, why shouldn’t I?
One should treat bankruptcy seriously and if you should ever be in debt, it does not mean that you need to go bankrupt. This is because bankruptcy involves the closing of your business, giving up the interest in your property as well as any possessions of value and the inability to obtain new credit. You will also be subjected to certain restrictions and not to mention that bankruptcy will damage your reputation in the community. It is best recommended that you get advice from your lawyer regarding the bankruptcy proceedings especially if they are taken against you or even if you are thinking about making yourself go bankrupt. So it is best that you consider alternatives to bankruptcy as they may produce better results.

How do I become a bankrupt?

In the bankruptcy proceedings, the total judgment debt must exceed the amount of RM30, 000. Then the bankruptcy notice will be issued and served to you and if you do not respond within the specific time that have provided to you on the settlement or negotiation of the settlement proposal then you will have committed an act of bankruptcy.

The court will then make a Receiving and Adjudication order after the bankruptcy petition has been presented. Here there are two types of Bankruptcy petition; there is the Debtor’s petition where you will present the petition and the Creditor’s petition which will then be presented to the creditors. So even if you refuse to acknowledge or agree to the order, a Receiving and Adjudication order can still be made. Once the bankruptcy proceedings have already begun then you are advised to cooperate fully.
If you are disputing the creditor’s claims then make sure that you try to reach a settlement before the Receiving and Adjudication Order. This is because if the bankruptcy petition hearing is not contested then the Receiving and Adjudication Order will be made. And you are in the process of being declared a bankrupt once the Receiving and Adjudication is made.

What are my duties as a bankrupt?

Once the Receiving and Adjudcation Order has been made, you must then go to the offices of the Official Assignee or Jabatan Pemegang Harta There you would need to provide information that relates to your financial affairs and hand over your assets to the officers. This would include all your books, bank statements that relates to your property as well as your financial affairs. After this you must stop using your bank and other similar accounts immediately and you must not try to obtain nay credit either by yourself or with other people.

In fact it would be an offence to conduct any form of business whether it is directly or indirectly in a different name from that in which you were initially made a bankrupt. The court will also take a small percentage from your monthly income within your means so that it can be paid to the Official Assignee. If you have extra money in your account, the Official Assignee will also have the power to claim the amounts which will be more than you will need for your normal living expenses, so that you can pay your creditors.

What restrictions does a bankrupt have?

After you have been adjudged as a bankrupt, you will be barred from holding certain public offices. And as mentioned before your reputation will be damaged not to mention your standing in the community. The Official Assignee will then administer all your assets as well as trace and monitor your conduct, after that your assets will then be disposed of so that you can pay the costs and the creditors. The Official Assignee will also have the power to recover property if you have disposed of it in a way that is deemed unfair to the creditors. As mentioned earlier it is an offence for you to obtain credit as an individual or with other people, you will also not be allowed to conduct business whether it is directly or indirectly in a different name from that in which you were made a bankrupt initially.
You will also not be put for any sort of promotion or managing a company without the permission from the Official Assignee. As a bankrupt you will also lose your passport and travel restrictions would come into force, however you can still obtain a passport only with the permission of the Official Assignee. You will only be able to open an account with the approval of the Official Assignee and this will be used for crediting your monthly income, of course certain limitations and conditions shall be imposed. The court may even order that you pay your part of your salary or income to the Official Assignee if your income is more than what you would need to live a normal life.

What is the procedure to become discharged from bankruptcy?

After you have paid all your debts in full, the court will then annul the Receiving and Adjudication Order. When this happens you will be immediately free from bankruptcy. However you should be aware the Bankruptcy Act 1967 has been amended and this has given discretionary powers to the Official Assignee where certain categories of the bankrupts can be discharged. This particular act was amended to facilitate with the discharge of some of the bankrupts in order to give them a “second chance” so that they become actively involve in the business industry again.

Under the amended Act there are also other categories of bankrupts that can be reprieved. These include those that have suffered due to the financial turmoil, guarantors of loans and bankrupt who are old, sick or jobless. Before anyone can be reprieved the Official Assignee will look at several criteria, for example they will look at your conduct and behavior as a bankrupt before and after the bankruptcy, your financial status and the ability to repay the debts as well as the reason for being declared a bankrupt. This means that if you have carried out your duties as a bankrupt then you can apply for you discharge to the Official Assignee. Examples of good conduct include making regular payments to the Official Assignee as well as full cooperation throughout the bankruptcy proceedings.

Despite your good conduct you need to be aware that you will not be automatically discharged from bankruptcy. Instead you will need to apply to the Official Assignee for your discharge and you can only do so after 5 years from the date of the Receiving and Adjudication Order. Once they have received your application they may issue you a “Sijil Pelepasan Pegawai Pemegang Harta” or “Official Assignee’s Discharge Certificate”. However this is upon the discretion of the Official Assignee and they may still refuse to issue you that certificate or they may delay it.

How will I know if I have been adjudged from being a bankrupt?

What you should do is go to the Official Assignee Office or Jabatan Pemegang Harta and from there you should obtain a copy of a search form from the counter. Each of the copy of the search form will cost you RM1; however photocopies of the forms are also acceptable. After you have filled in your particulars, submit the form. After your request has been received by the Official Assignee Office, they will forward it to the head office in Kuala Lumpur where the search will then be conducted. Once that is done, the official result of the search will be sent to the address that has been provided in the search form. It will cost you RM5 to make a bankruptcy search on an individual.

Bankruptcy cases up
Published on: Monday, June 30, 2003 by Daily Express.

Kota Kinabalu: The number of bankruptcy cases in Kota Kinabalu, Sandakan and Tawau has increased by 10 per cent to a total of 8,878 as of May this year.

Of the number, 50 per cent are loan guarantors, 20 per cent defaulting credit card holders and about 30 per cent borrowers under the hire-purchase, personal loan, study loan and other loan schemes.

A total of 6,168 bankruptcy cases have been administered by the Kota Kinabalu Official Assignee (OA) Department, 1,200 by its Sandakan counterpart and 1,510 by the Tawau OA’s office.

Disclosing this in an interview, Sabah Senior Assistant Official Assignee Kamin Kusaran admitted it was not easy to pursue the “non-genuine bankrupts” who are still seen indulging in an extravagant lifestyle, such as driving luxury cars and so on.

However, the OA would call these individuals to the office to report their asset-liability status but it was not an easy task to prove that they still own attachable chattels or properties that could be liquidated to meet the judgement of creditors’ claims.

“Once a debtor receives a Notice of Bankruptcy (NOB), he has seven days to make payment, failing which, on the eighth day, the debtor is deemed to have committed an act of bankruptcy, as provided for under Section 52 of the Bankruptcy Act 1967.

“From the eighth day, the creditor has six months to file a petition to declare the debtor a bankrupt,” Kamin said.

According to Section 47 of the Act, if the debtor transfers the title of any of his property to a third party within two years of the eighth day, the assignment is absolutely void, he added.

This is because when the debtor has committed an act of bankruptcy, his property is deemed to be “related back to the OA’s title”, by virtue of the same Section 47.

“And if the person conveys his property within five years after the first two years have lapsed, the transfer is voidable,

“In this case, whether the transfer is ultimately void would depend on the outcome of the litigation between the concerned parties,” clarified Kamin.

So, there is a statutory protection for creditors against debtors who try to “save” their properties from becoming attached in the middle of the petition.

“It is usual for a debtor to make frantic efforts to transfer his properties elsewhere during the seven-day grace period upon receiving the NOB.

”However, it is not easy to detect any debtor transferring his properties to another party before receiving the NOB,” he said.

“During such time, it is up to the creditors to apply to the court for an injunctive order to stop the debtor from doing so, and it would be up to the court whether to grant the order.

“Anyway, we do have our own ways and means to detect these elusive bankrupts but we cannot reveal them (the ways and means) for we do not want them to know our tactics,” said Kamin, on a lighter note.

Meanwhile, he also called on the creditors and debtors alike to be cooperative with the OA so that the matter could be disposed of in a win-win manner for both parties.

On whether the limit of bankruptcy, which was approved by Parliament recently to be increased to RM30,000, has been gazzetted, Kamin said his office has yet to receive instructions from the Kuala Lumpur OA on the matter.

On whether commercial creditors get priority for debt settlement, Kamin said top priority is accorded to rates holders such as the City Hall, the Inland Revenue Board (only for a year’s worth of back taxes) and the debtor’s staff wages, in that order.

The objective of bankruptcy, quite contrary to general public conception, is to protect a bankrupt from being harassed by creditors and to assist a bankrupt begin a new life without the burden of debt, besides safeguarding the rights of bankrupts and creditors, Karim said.

What does it take to become a billionaire

We all dream of making it big in life and becoming wealthy. For many of us, becoming a millionaire is hard enough, let alone trying to become a billionaire. Not everyone has what it takes to become that rice. Are you of those who can become a billionaire?

Below is a set of questions developed by top psychologists Debra Condren, David Ballard and Joan Kane to assess your ability to reach that high.

1. "Can you tolerate and manage ambiguity?"

An aspiring billionaire can see through a maze of information or data and is not muddled easily. He is able to see a successful venture when others run away from the idea.

2. "Can you deal with isolation?"

It can be a lonely place at the top. Definitely, many will try to be your friend. But only an aspiring billionaire will know how to differentiate a true friend from the fake one.

3. "Why go big at all?"

An aspiring billionaire has goals especially long term ones and has charted out a road map to reach them.

4. "Can you see around the corners?"

An aspiring billionaire will be able to transform an existing industry as well as create new ones.

5. "Do you prize independence?"

If you do, then this would have been motivation enough for you to start your own business. You are your own boss. Later on however, when your business empire has grown, you have to deal with a group of people like the board members and investors.

6. "Do you have the guts to double-down?"

Not everyone has a strong character and is tough enough to deal with all types of problems. Not everyone is able to tackle the hurdles of going out to build a great business. Despite massive risks, an aspiring billionaire has what it takes to tackle any obstacles and come out a winner at the end.

7. "Are you willing to make tough decisions for the growth of the company?"

Being the leader or the boss involves making difficult decisions that protect your business or company. This means putting the company's interests over your own.

8. "Do you like speaking in public?"

Any business will gain from massive public exposure. This may mean meeting various groups of people like your staff, shareholders and customers, attending a public function or giving a television interview.

9. "Are you a consensus builder?"

An aspiring billionaire must have the talent to garner the consensus of the people around him to support him. No man is an island to himself. Therefore, you need to garner support from the people around you.

10. "Can you delegate?"

An aspiring billionaire is smart enough to delegate parts of the work to others, while overseeing the whole business successfully.

11. "Are you inspired by creativity or more process-oriented?"

There is nothing wrong with being creative. However, an aspiring billionaire must know how to implement the ideas and work systematically to make them successful.

12. "If you say you need it on your desk by 9 am, will it get done?"

An aspiring billionaire has to be somewhat strict which is to be expected from a leader of a big company. He must have some level of respect from his employees even if it means sacrificing a bit of friendship or goodwill in the process.

13. "Can you work on Christmas?"

An aspiring billionaire is willing to make sacrifices to attain his goal, regardless of what the circumstances.

The person who fulfills all of the above is not contented in achieving a 7-9 figure net worth only. This person is shooting for the stars aiming for a 10 figure net worth and the billionaire status.