LAWS OF EVE - Will I have to file for bankruptcy?

Sherry-Ann McGregor - Contributed

One of the realities which some persons are forced to confront during harsh economic times is the inability to pay their due debts. Still less fortunate persons may find that they must rely on the provisions of the Bankruptcy Act, if they are to continue to survive.

One reader asked "How can I file for bankruptcy?" Let us take a look at some of the provisions of the Bankruptcy Act.

Who may apply?

A debtor may present a petition against himself, together with a statement verifying his assets and liabilities.

One or more creditors may present a bankruptcy petition to the court against a debtor on an allegation that an act of bankruptcy has been committed, within six months prior to the presentation of the petition in respect of any debt exceeding $3,000.00. (This includes a deceased debtor.)

Act of bankruptcy?

The Act lists 12 possible acts of bankruptcy, which include:

1. Fraudulent transfer of property.

2. The debtors' sale of his assets or departure from Jamaica with intent to delay or defeat creditors.

3. The debtor's declaration that he is unable to meet his engagements.

4. Presentation of a bankruptcy petition by the debtor himself.

What court should hear the petition

Where the debtor's estate has a value of less than $30,000.00, the petition must be presented to the Resident Magistrate's Court in the parish in which the debtor resides. In cases in which the value of the debtor's estate exceeds $30,000.00, the Supreme Court shall have jurisdiction to hear the petition.

The Process

The petition does not need to be heard before it is served and, at that first hearing, the court may make a provisional order to the effect that the affairs of the debtor shall be wound up and his property administered under the law of bankruptcy.

The court will direct that the provisional order be served on the debtor, after which he will be entitled to bring evidence to prove that the provisional order should be revoked. In the meantime, all of his property will vest in the Trustee in Bankruptcy and all other attempts to recover debts from him will be suspended.

If the debtor does not show cause why the provisional order should be revoked, at the next hearing the provisional order could be made final.

The final order will be published in The Gazette.

The Trustee shall administer the debtor's estate to the benefit of his creditors.

The Practical Effect

The debtor's assets may be sold and used to pay his creditors.

If the debtor expects to receive an inheritance or future payment, it may go directly to his creditors.

There are certain jobs which a debtor cannot hold as a bankrupt or a discharged bankrupt.

Until the Bankruptcy Act is amended, the debtor is not entitled to retain any property except those which he holds in trust, or tools (if any) of his trade, and the necessary wearing apparel and bedding of himself, his wife and children to a value, inclusive of tools and apparel and bedding, not exceeding $60 in the whole.

There is the possibility of permanent damage to your reputation.

Stress.

This is an abridged review of the Bankruptcy Act, other aspects of which will be explored in the coming weeks. It is difficult to predict how often it may be resorted to in the coming months, but section 104 needs urgent attention.

Sherry-Ann McGregor is a partner and mediator with the firm Nunes, Scholefield, DeLeon & Co. Send feedback and questions to lawsofeve@yahoo.com or Lifestyle@gleanerjm.com.