1. How can a bankrupt be released from his bankruptcy status?

There are 3 ways in which a bankrupt can be released from his bankruptcy status:

  1. By way of annulment
    The bankrupt can make an application in court at any time to annul the bankruptcy order under certain grounds eg. the debt has been settled fully or the bankrupt ought not to be made a bankrupt on certain grounds

2. By way of discharge in court
The bankrupt can make an application in court at any time to discharge himself from the bankruptcy status. The DGI has to produce a report on the conduct of the bankrupt and cooperation of the bankrupt with the department.

3. By way of discharge by the DGI
 The bankrupt can make an application to the DGI for a discharge under Section 33A of the Insolvency Act 1967. However, it can only be made if 5 years has lapsed from the date the bankruptcy order was made and some criteria imposed by the DGI in order to discharge the bankrupt.

2. Is there an automatic discharge for a bankrupt?

Under the Insolvency At 1967, there is an automatic discharge of a bankrupt upon the expiry of three years from the date of submission of the statement of affairs by the bankrupt if the bankrupt has

a) Achieved an amount of target contribution of his debt;
b) Complied with the requirement to render an account and property to the DGI.

There are several factors that the DGI may take into consideration in determining the target contribution. For example:

a) Amount of the debt of the bankrupt;
b) Current monthly income of the bankrupt;
c) Prospective month income during the bankruptcy period;
d) Earning capacity of the bankrupt
e) Age and work experience;
f) Educational level;
g) Current economic conditions

The DGI would then serve a notice of discharge on every creditors not less than 6 months before the expiry of 3 years. A creditor may, within 21 days of being served such notice, object to the automatic discharge by applying to court using the following grounds:

a) The bankrupt has committed any offence under the Act or certain provisions under the Penal Code in relation to concealment of property to prevent distribution to creditors;
b) The discharge would prejudice the administration of the bankrupt’s estate;
c) The bankrupt has failed to co-operate in the administration of his estate.

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