Social and Emotional Aftermath of Bankruptcy in Hong Kong
The effects of bankruptcy are devastating. There is no doubt about that. This is why people are oftentimes encouraged to avoid it at all cost. It will not only leave you with a bad credit reputation, it will also compromise your future endeavours.
Although you will be bear the burden of the bankruptcy consequences, you have to know that the people around you will suffer with you as well. Your family – spouse and children, will also suffer the effects of your bankruptcy petition.
Unfortunately, there are a lot of Hong Kong residents and companies that have succumbed to the call of bankruptcy. In 2014, the Receiver’s Office revealed that Hong Kong City had 9,945 cases of bankruptcy – both individual and corporations. This was said to be the highest since 2010. In the first quarter of 2015, the recorded bankruptcy cases reached 2,567.
That is a lot of bankruptcies for such a small city. It is also alarming since this is supposed to be a strong financial market. How can that be when the local residents are struggling to pay off their debts and have resorted to a bankruptcy petition to find relief?
Financial effects of bankruptcy in the household
While we cannot judge how people have come to the position of bankruptcy, one thing is clear – your life and that of your family will never be the same again. The taint of bankruptcy will last for 4 years – even up to 5 if you have filed before.
To motivate you to avoid bankruptcy at all costs, here are the devastating financial effects on your family:
Your household assets will be significantly lower.
According to Clic.org, only your share of joint accounts or assets will be seized by the Trustee. For instance, if you have a joint bank account with your husband, only your half of the amount will be taken and used to pay off your creditors.
If you have 3 other siblings and you equally own a land, only a fourth of that total land area will be taken because that is the only part that is yours. While this protects the assets of your family, that does not mean it will not affect them. When your assets and accounts are seized, the total asset in the household will be reduced.
You will naturally have to rely on your family for financial help until you are able to get back on your feet.
You have to make sacrifices to cope.
Your assets will be significantly lower and you will be forced to start over on various financial aspects. Since your husband still has his share of the household wealth, all of you will make sacrifices if you want to rebuild your part that was lost in the bankruptcy process. That means fewer entertainment expenses or foregoing the annual family holiday.
Your family may be willing to help you out but it comes with personal regret because you know that everyone has to go through all the sacrifices because of your financial mistakes.
You may be jobless.
Another effect of bankruptcy is unemployment. There are certain professions wherein you will not be allowed to practice while going through the bankruptcy process. For instance, if you are a lawyer or an agent, you will not be allowed to take on clients.
If you work in the financial sector, you will be forced to tell your employer about your bankruptcy petition and that could lead to termination. These are all possibilities and your family will feel this as well. The loss of income means someone has to work harder to pay for all the expenses of the family.
You will have limited resources.
The final effect of bankruptcy in the family is the limited resources you will have to live with for the next few years. If you and your spouse have plans, that will have to go in the back seat for now. You cannot apply for a loan to help you buy a new house.
Even if you want to get an education loan, that is also not possible. You will not be allowed to be the director of any business – which will hinder your career tremendously. Instead of helping the family progress financially, they will have to keep you out of the loop while you are still suffering the effects of bankruptcy.
How else can bankruptcy affect your family?
Apart from the financial effects that it has in your life, there are also three important aspects that bankruptcy will bring to your household:
- Emotional trauma. The emotional trauma that you will go through will reflect on your relationships. Bankruptcy has the tendency of making you feel depressed and withdrawn. That will have a significant effect on how you interact with your spouse and your children.
- Broken trust. Another non-financial effect is the broken trust. Financial infidelity is a real cause of discord in the family. As much as your husband loves you, expect that his trust in you will be lessened – if not diminished. At least this is true when it comes to your finances. If your irresponsible behaviour with money landed you in debt and bankruptcy, you can be sure that it broke the trust that your spouse feels towards your abilities.
- Loss of financial confidence. Finally, your financial confidence would take a serious beating after bankruptcy. Even if your spouse will not blame you or is willing to forgive your financial mistakes, you might find it hard to do for yourself. If you lose your self-confidence – specifically in your financial and credit management abilities, it will be very hard for you to recover. This can lengthen the healing process that you have to go through to get over the effects of your bankruptcy petition.
As you can see, the effects of bankruptcy are not isolated. The people around you, especially those who love you, will feel the repercussions as well. This is probably one of the reasons why this is such a devastating financial process to complete.
It is no wonder experts encourage everyone to take very good care of their finances – lest bankruptcy comes in to destroy what the whole family has worked hard to accumulate.Recommend0 recommendationsPublished in Hong Kong, Unemployment & Bankruptcy