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Filing for bankruptcy is a legal process under which the court declares you unable to pay your debts. In some cases, bankruptcy can be anoption for getting out of a bad financial situation, although you'll be placed under a number of restrictions.

Once you're declared bankrupt, the Official Receiver becomes the provisionaltrusteeand has the power to arrange how your property- in Hong Kong and elsewhere- will be distributed to creditors. If your assets are under HKD200,000, the Official Receiver may appoint a qualified person as a provisional trustee. There's no minimum amount of debt for an individual to declare bankruptcy, although the Official Receiver can reject your application if you have previously declared bankruptcy.

When bankruptcy might be an option

Declaring bankruptcy can permanently affect your ability to access credit, so consider your options carefully.

If you experience any of these financial warning signs, taking swift action can help you avoid further financial troubles.

  • You cannot make minimum monthly payments on your credit card, and the interest charges are mounting.
  • You juggle bills by paying some and not paying others.
  • You have no emergency funds or savings.
  • Your landlord or mortgage holder has threatened eviction or foreclosure.
  • You have used up all available lines of credit.
  • You have gone to a money lender to pay for basic needs, such as food, rent and utility bills.
  • However if you have serious difficulty in paying off your debt, bankruptcy may be able to provide relief from your financial burdens. Only do this if you have explored all other options, and seek legal advice or financial counselling before you proceed.

How to apply for bankruptcy

  • File a "Debtor's Bankruptcy Petition" and a "Statement of Affairs" with the Official Receiver. These forms are available free of charge in the Debtor's Bankruptcy Petition Procedural Guide.
  • Pay a deposit of HKD8,650 to cover the Official Receiver (or trustee's) fees and expenses.
  • Have the Petition attested and the Statement of Affairs sworn.
  • Go to the Registry of the High Court and pay a court fee of HKD1,045, obtain a date for the hearing of the Petition and file the Petition and the Statement of Affairs.
  • Submit a sealed copy of the Petition and a copy of the Statement of Affairs to the Official Receiver.

Consequences of bankruptcy

After you're declared bankrupt, you'll be placed under certain restrictions:

  • You'll be classified as bankrupt for four years - five if you've been bankrupt before - and the Official Receiver (or a trustee), will look after your financial affairs.
  • You won't be allowed to make major purchases such as a flat or a car.
  • You won't be able to apply for further loans.
  • Your provident fund may be used to repay your creditors.
  • Public records related to bankruptcy will be noted on your credit report.
  • While bankrupt, you cannot be a director of a company or operate a business. You may also be barred from working in particular trades and professions.
  • Once a Bankruptcy Order is made, the Official Receiver will advertise the Bankruptcy Order in the Gazette and in an English- and Chinese-language newspaper.

Is there any alternative to bankruptcy?

Under the Bankruptcy Ordinance, a debtor can apply for an Individual Voluntary Arrangement (IVA) as an alternative to bankruptcy. This allows the debtor to make a repayment proposal to the court and the creditors. If approved, it legally binds all creditors. By applying for an IVA, a debtor can avoid the legal restrictions of bankruptcy, and may also be able to retain his/her job or profession.

For more information, read the Simple Guide on Bankruptcy, the Simple Guide on Individual Voluntary Arrangement and Frequently Asked Questions about Bankruptcy from the Official Receiver's Office.