With the way things are going right now, we hope that bankruptcy petitions in Hong Kong do not rise.
In 2013, a Bloomberg article revealed that the number of bankruptcies in Hong Kong rose after a slower growth in the economy. Experts said that high household debts in Hong Kong posed a risk to the housing market. When there is an instability in the real estate market, things can go downhill for a lot of households.
After all, a real estate property is the biggest asset many people have. When property values start to fall, the economic stability of households is shaken. Once that happens, people are unable to pay off the debts, causing creditors and collectors to come after them. This is when people get desperate and find themselves filing for bankruptcy.
For most people, filing for bankruptcy in Hong Kong is the worst thing that can happen to their finances. It is an evidence that you have mismanaged your finances and that you were unable to commit to your credit obligations. While it is a devastating process to go through, there are times when it is necessary so you can start with a clean financial slate.
But how can you move on after bankruptcy? How can you start over when your finances seem like they are in ruins?
What is the impact of bankruptcy on your life?
Here are the effects of bankruptcy that you should expect:
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Once a Bankruptcy Order is issued, it will be advertised in the Gazette. And it will be published in Chinese and English newspapers.
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Your employment will also be affected depending on your profession:
- If you are a civil servant, the Department Secretary where you are assigned to will be informed of your financial situation. Not only that, the Civil Service Bureau and the Treasury will also be notified. The Trustee will be the one to provide them with your bankruptcy information.
- If you are employed in the private sector, the Trustee does not have to inform your employer. Unless he or she deems it necessary for the bankruptcy process and investigation.
- If you are a lawyer, securities dealer, estate agent, or a director of a limited company, you will not be allowed to practise your profession.
- If you work in the financial sector, specifically in a bank, you will be required by the Banking Ordinance to inform your employer about your bankruptcy petition.
- If your profession is not stated here, you should still look at your employment contract to determine whether or not you are expected to report the bankruptcy to your employer.
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If it is deemed necessary in the liquidation process, and if it is applicable, the Trustee will go to your house to inspect it.
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The Trustee will take hold of and manage your assets and income.
He or she will determine how much you and your family will need to live on (domestic needs). Anything that is left will be liquidated and distributed towards your creditors as payment for the debt that you were unable to pay.
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In case there is a need to travel abroad, you are not prohibited from doing so – as long as you are not paying for it through the income and assets that the Trustee is holding for you.
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When it comes to paying off your debts, once the bankruptcy petition is filed, you should not directly send payments to your creditors or lenders.
The Trustee will take care of that for you based on what will be liquidated from your assets.
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If you currently have a life insurance policy, the Trustee will not allow you to make payments towards it.
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Given that the bankruptcy is filed because you are unable to pay off your debts, you are not authorised to open new credit accounts.
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Since the Trustee will be managing your income and assets, you are expected to update them of any changes in your life, (e.g. change in address, income, employment, etc.)
Although the effects of bankruptcy in Hong Kong can be a heavy and restricting burden, you should not worry because your relatives will not be held accountable for your debts.
5-step process of rebuilding your finances after bankruptcy
Going through the bankruptcy process in Hong Kong is tough. But recovering from it is harder. The rebuilding process will take time and a lot of effort. Here is a 5-step process that you can follow to help you get over the ugly effects of bankruptcy in Hong Kong:
Step 1: Forgive yourself.
Start by letting go of everything that has happened. You need to forgive yourself for the mistakes of the past. It is how you triumph and rise from the ashes of bankruptcy that will define your character.
Step 2: Set new goals.
Once you have made peace with yourself, it is time for you to set new goals. The best way to move forward is to give yourself something to look forward to. New targets are the best ways to keep your eyes focused on how you can improve your life to avoid bankruptcy again. Ideally, your goals should start small. As you experience at least one little success, you will feel more confident to set bigger ones.
Step 3: Create plans to reach your goals.
When you have new goals, create a plan and a timeline to achieve them. Start slow and steady. Monitor your progress and motivate yourself to complete the tasks. As you progress, you will start to build the confidence that you lost when you filed for bankruptcy.
Step 4: Fix your budget plan and follow through.
Make sure you learn how to manage your finances. Regardless of the outside factors that destroyed your financial position, learning and implementing proper financial management will help you minimise the risk of making a mistake. A budget plan is the most simple way you can use to manage your finances.
Step 5: Practise new habits.
You need to reflect on the mistakes that led you towards bankruptcy. You have to ensure that you will no longer commit them and that you will only practise the right financial habits from now on. These habits include budgeting, saving, and making smarter spending choices.
As you can see, you do not have to remain in bankruptcy forever. When you reach the bottom, there is nowhere else to go but up.
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