Dealing with Bankruptcy: Benefits of Using the IVA in Hong Kong

Once you understand how it can ruin your life, you will find a way to learn how to avoid bankruptcy. The effects of bankruptcy in Hong Kong is not only limited to what it can do to your life. It can also endanger your family’s welfare and at the same time, compromise the bright future that you are dreaming of.

The truth is, it is quite simple for you to avoid bankruptcy. You simply have to learn how to manage your finances. As long as you develop the right habits that will help you balance your income, debt, and expenses, it should not take too much effort to keep yourself from filing a bankruptcy petition in your lifetime.

Of course, there are cases wherein life plays a cruel joke on you. There are times when people make all the right choices but still end up on the brink of bankruptcy. If you or a family member is diagnosed with a serious illness, mountains of medical bills can start to pile up. If you have to borrow money to pay it all off, that can quickly escalate into a pre-bankruptcy scenario.

How To Avoid Bankruptcy In Hong Kong Through The IVA

Opt for the IVA to avoid bankruptcy

If are financially distressed but you have the resolve to avoid bankruptcy at all costs, there is one option for you: Individual Voluntary Arrangement or the IVA.

According to the data from the Official Receiver’s Office, the IVA is a procedure that is still considered a part of the Bankruptcy Ordinance but defined as an alternative. Instead of asking the court to discharge your debts after liquidating your assets, you will be going through a repayment plan.

You will submit a repayment proposal – both to the bankruptcy court and your creditors or lenders. Once the court approves that proposal, all your creditors have no choice but to accept it. Of course, the creditors will be part of the parties who will approve but the court will have the last say.

 

Using the IVA to help you avoid bankruptcy will give you the following benefits:

  • You do not have to suffer all the legal restrictions of bankruptcy. For instance, you can still borrow a loan if you feel that you need it to improve your financial position.
  • You will enter into a private agreement with all your creditors and lenders. And you will still pay them off – but this time, through a repayment plan that you can afford and they can accept.
  • You do not have to report any bankruptcy petition to your employers. You can continue to practice your profession even in the financial industry. This will not be possible when you file for bankruptcy. Even lawyers and agents are not allowed to practice or be paid to do their job.
  • You can still run your own business. If you are considered bankrupt – you cannot run a company for the next 4-5 years. After that, you may be allowed to start a business but getting the funds to finance your startup may be difficult.
  • You are not required to submit your income and assets under the management of the Trustee. You can continue to manage them on your own and use them as you wish. That may be to help you pay your debts or invest in ways that will improve your financial position.

 

The IVA will protect you from the negative implications of bankruptcy but there are also a couple of drawbacks. The IVA will take longer and cost you more because you are paying for your debt and will not have it discharged. And if the IVA is not approved or you cannot follow through with the implementation, the creditor or lender will file a case against you.

 

To know more about the Individual Voluntary Arrangement, visit the website of the Official receiver’s Office through their page IVA Guide.

 

Other options to avoid bankruptcy in Hong Kong

Apart from the IVA, there are other options that will help you stay away from bankruptcy in Hong Kong.

 

Negotiate with creditors and lenders.

Believe it or not, creditors and lenders are hesitant to have you declare bankruptcy because it will also cost them money. They will be willing to negotiate with you because bankruptcy will put them at risk.

According to an article published on EJInsight.com, the rising delinquent accounts from the mainland residents are threatening Hong Kong banks. They do not want you as an addition to their credit crisis so they will listen to your proposal. Of course, you have to give them something they can accept but make sure it is something you can afford.

 

Be cautious of using debt – especially high-interest debts.

We are actually referring to credit cards. On an average, credit card owners in Hong Kong are quite responsible with their respective accounts. But one mistake or one unexpected expense could put your finances in danger of falling short. If you choose to sacrifice your credit card payments, the high-interest rate will cause your balance to accumulate. This is why you have to keep your credit spending low and limited to necessary expenses alone.

 

Build up an adequate emergency fund.

Even if you are responsible for all your financial decisions, you will still be in danger of bankruptcy if you are not prepared for unexpected events. One trip to the ER might force you to borrow money without a way to pay it back. Do not let this happen.

Avoid bankruptcy by saving for an emergency. If anything, this will help make your finances secure and will keep you from the need to borrow money.

 

As you can see, you have a couple of options to avoid bankruptcy. You just have to be smart about your financial choices and be very careful about how you will use debt. While you can use your credit to improve your financial position, it can backfire if your financial resources are suddenly compromised.

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