1. What is personal insolvency?
Personal insolvency occurs when an individual is unable to repay their debts. This situation can be addressed through legal processes such as bankruptcy or debt restructuring plans, including a Debt Relief Plan (DRP) or an Individual Voluntary Arrangement (IVA).
2. What is bankruptcy, and when should I consider it?
Bankruptcy is a legal process where an individual declares their inability to repay debts. It can provide relief from overwhelming financial obligations by liquidating assets to pay off creditors. Bankruptcy may be considered if other debt relief options, like negotiating with creditors or restructuring debt, are not feasible. Our legal team can help you understand the implications of bankruptcy and guide you through the application process.
3. What is a Debt Relief Plan (DRP)?
A DRP is a debt restructuring program designed to help individuals manage their debts by negotiating with creditors, such as banks and finance companies, to reduce interest rates and extend repayment terms. This makes debt repayment more manageable and can help you avoid the need to file for bankruptcy.
4. How does a Debt Relief Plan (DRP) work?
Through a DRP, our lawyers will negotiate with your creditors to restructure your debt. This may involve lowering interest rates, extending repayment periods, or consolidating multiple debts into a single, more manageable payment. The goal is to make repayment more affordable, allowing you to regain control over your finances without the need for bankruptcy.
5. What is an Individual Voluntary Arrangement (IVA)?
An IVA is a legally binding agreement between you and your creditors to repay your debts over a specified period, usually three to five years. It allows you to pay a portion of your debt, with the remaining balance being written off at the end of the arrangement. An IVA can help you avoid bankruptcy while providing a structured way to manage and repay your debts.
6. How can your law firm help with bankruptcy applications?
We assist clients by providing practical advice on whether bankruptcy is the right option for their situation. If you decide to proceed with bankruptcy, we handle the preparation and filing of the necessary court documents, represent you throughout the process, and ensure that your rights are protected at each step.
7. What are the advantages of a Debt Relief Plan over bankruptcy?
A DRP allows you to manage and repay your debts without declaring bankruptcy, which can have serious consequences for your credit rating and future financial opportunities. With a DRP, you may be able to retain your assets and avoid the stigma associated with bankruptcy. It is often a preferred option for individuals who want to preserve their financial reputation.
8. What happens to my assets if I file for bankruptcy?
If you declare bankruptcy, your assets, such as property and valuable possessions, may be sold to pay off your creditors. Some assets, like essential household items, may be exempt from liquidation. Our lawyers can advise you on which assets may be at risk and help you understand the potential outcomes of a bankruptcy filing.
9. Can I keep my home if I enter into a DRP or IVA?
A DRP or IVA aims to restructure your debts without requiring you to sell your home. In many cases, individuals are able to retain their homes as long as they can maintain the restructured payment plan. Our lawyers will work to negotiate terms that protect your home while making repayments more manageable.
10. How long does a bankruptcy process take in Hong Kong?
The bankruptcy process typically lasts for four years in Hong Kong, but it may be extended under certain conditions. During this time, you will be subject to restrictions, such as limits on obtaining new credit. Our legal team can guide you through the process and help you understand your obligations.
11. What are the consequences of declaring bankruptcy in Hong Kong?
Declaring bankruptcy can have significant consequences, including the loss of assets, a negative impact on your credit rating, and restrictions on obtaining new credit. It can also affect your ability to act as a company director or hold certain professional positions. We provide guidance on these consequences to help you make an informed decision.
12. How can I start the debt restructuring process through a DRP?
To start the process, contact our legal team for a consultation. We will assess your financial situation, discuss your options, and negotiate with your creditors to create a manageable repayment plan. Our goal is to find a solution that helps you regain financial stability.
13. Can I include all types of debts in a DRP or IVA?
Most unsecured debts, such as credit card balances, personal loans, and overdrafts, can be included in a DRP or IVA. However, some debts, like student loans, child support, and court fines, may not be eligible for restructuring. Our lawyers will review your specific situation and advise on which debts can be included.
14. What should I do if I am struggling with mortgage payments?
If you are struggling with mortgage payments, it is crucial to seek legal advice as soon as possible. We can help you explore options such as refinancing, restructuring your debt through a DRP or IVA, or negotiating with your lender to find a solution that allows you to keep your home.
15. How can I recover from bankruptcy or a DRP financially?
Recovery from bankruptcy or a DRP requires careful financial planning and rebuilding your credit. Our legal team can provide guidance on managing your finances post-bankruptcy, including creating a budget, managing expenses, and understanding how to improve your credit rating over time.
16. What is negative equity, and how does it affect my debts?
Negative equity occurs when the value of your property falls below the outstanding mortgage balance, making it difficult to sell the property to pay off the debt. Our lawyers can help you understand your options if you are facing negative equity, including restructuring your mortgage or negotiating with your lender for a more favorable repayment arrangement.
17. How do I decide between bankruptcy, a DRP, or an IVA?
Choosing the right option depends on factors like your total debt, income, assets, and long-term financial goals. Our experienced lawyers will evaluate your situation and provide personalized advice on the most suitable option, whether it is bankruptcy, a DRP, or an IVA.
18. How can I get in touch with your law firm for help with debt issues?
You can reach us through our online enquiry form or call our office directly for a consultation. We will assess your situation, explain your options, and provide the legal support you need to resolve your debt issues.
