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Typically, when one is declared bankrupt, one’s assets will be sold and the proceeds shall go into a bankruptcy estate that is managed by the Official Assignee. However, there are certain assets that are excluded and protected from bankruptcy, which shall be addressed further below.
Firstly, an Official Assignee is a public servant and an officer of the Court, who works closely with the officers at the Insolvency Office. Official Assignees are typically appointed by the High Court to be trustees of bankruptcy estates. However, should a petitioning creditor wish to request for a private trustee to administer the bankrupt’s affairs, the Court has the powers to do so.
Secondly, the role of an Official Assignee is to act as a receiver of the bankrupt’s estate, whereby a bankruptcy estate shall be managed or overseen by an Official Assignee. The role of an Official Assignee also encompasses consulting with creditors, as far as practicable, as to how the bankrupt’s estate ought to be managed. Further, an Official Assignee’s role encompasses the following:-
A bankrupt also has to seek prior consent from the Official Assignee if he wishes to commence or continue a court action for damages or compensation for wrongful acts or personal injuries.
(It is important to note, however, other than the above-mentioned actions, a bankrupt may not commence or continue a court action.)
When one is declared bankrupt, an Official Assignee shall be assigned, and he or she shall oversee and manage the bankrupt’s assets, which are subsumed into one’s bankruptcy estate. The bankrupt has to surrender his assets to the Official Assignee, whereby he or she shall then distribute the assets in the form of dividends from the bankruptcy estate, to creditors who have provided proof of debts.
This bankruptcy estate includes assets such as gifts received prior to one’s discharge from bankruptcy, and any asset of value that belongs to the bankrupt at the date of or after the Bankruptcy Order has been given. Assets kept overseas, such as property, shall also form part of the bankruptcy estate. In the case of any sale of assets, proceeds after the deduction of secured debts shall also form part of the bankruptcy estate.
However, there are some exceptions to assets that can be protected from distribution to creditors. Section 78 of the Bankruptcy Act sets out what shall happen to one’s assets, and that creditors shall take possession of the property that does not fall under protected assets. These protected assets include:
One should note that if there is any default on monthly contributions, assets that do not fall under protected assets, may be sold by creditors if those assets were used as security for one’s loans to the creditors.
Hence, in short, assets that shall form part of the bankruptcy estate, which creditors can take possession of shall include assets such as investments, stocks, insurance policies, bank accounts, etc.
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At Lions Chambers LLC, we pride ourselves on being responsive. We understand that some problems need immediate attention, let us assist you.