What is Bankruptcy?

Bankrupt

Table of Contents

Bankruptcy is

The consequences of insolvent individual

The criteria for insolvency

Disadvantages of Bankruptcy

Insolvency, does it result in imprisonment

Creditors, what to do if the debtor goes bankrupt

Basic recommendations if facing bankruptcy

Can an insolvent person work?

Can an insolvent person engage in financial transactions?

Can an insolvent person get insurance?

Can an insolvent person operate a business?

summarize

Bankruptcy is

It is a situation where an individual or a legal entity is in a state of being “insolvent.” In other words, they have accumulated a substantial amount of debt and lack the ability to repay their creditors.

To enter a state of insolvency, individuals or legal entities need to go through a legal process known as bankruptcy. To ensure fairness in the entire process for both debtors and creditors.

Insolvent is

For individuals, it is required to have debts exceeding 1 million Baht, and for legal entities, it is necessary to have debts exceeding 2 million Baht

The consequences of insolvent individual

Being an insolvent individual has the following consequences, making it impossible to engage in any legal transactions, including various financial transactions, such as opening a bank account. It also results in the inability to hold positions in companies or various businesses.

The criteria for insolvency

1. For individuals, it is required to have debts exceeding 1 million Baht
2. For legal entities, it is necessary to have debts exceeding 2 million Baht
3. A person who is inclined to have debts exceeding their ability to repay, or lacks the capability to settle debts with creditors.

Disadvantages of Bankruptcy

1.Unable to engage in any legal transactions whatsoever, including various financial transactions such as opening a bank account, transferring money, and withdrawing funds.

2.Unable to apply for or be elected as a member of the House of Representatives or hold any political position. Additionally, ineligible for public service, and if already in public service, would be required to resign.

3.Unable to hold a position in a company.

4.Unable to travel abroad.

Insolvency, does it result in imprisonment

After the court issues a judgment, the debtor is required to report to the asset execution officer to attend a meeting with the creditors. They also need to prepare a monthly income and expenditure statement to present at the meeting and discuss with the asset execution officer.

In general, during this period, any actions related to the assets must be prohibited. The debtor may be allowed to perform only certain actions, such as notifying the asset execution officer to request funds for reasonable living expenses. If there is a violation, such as secretly transferring or moving any assets during this period, the individual may face criminal penalties.

Creditors, what to do if the debtor goes bankrupt

1.In the initial steps, creditors should assist in gathering information about the debtor to provide details about the assets and the debtor’s address or information to the asset execution officer.

2.Monitor and track the assets of the debtor or the insolvent individual, and then inform the asset execution officer to assist in the collection and sale of the debtor’s or insolvent individual’s assets.

3.To file a debt repayment request, it must be done within 2 months from the date of the asset execution announcement.

4.Inspect the debt repayment request as scheduled by the asset execution officer.

5.Attend every creditor meeting and appear in court on the scheduled date for the examination of the debtor, as notified by the asset execution officer.

6.Receive the share of the collected assets in the bankruptcy case, where the debtor may have funds to partially repay.

Basic recommendations if facing bankruptcy

1.When a debtor receives a debt collection letter, it is advisable to promptly negotiate with the creditor and consider making partial payments, such as 10-30% of the total debt.

2.Debtors should negotiate for a debt reduction before facing bankruptcy proceedings. During the period when the debtor is insolvent, creditors may incur losses on the unrecoverable debts. Therefore, reaching an agreement is often more achievable as the total payment made by the debtor during insolvency can be considered a profit for the creditor.

3.When receiving a court summons, it is advisable to promptly consult with a lawyer. It is not recommended to handle the matter personally, as it may result in a disadvantage or loss of rights.

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Can an insolvent person work?

An insolvent person cannot hold a position in a company, unless absolutely necessary and with permission from the asset officer. However, even with permission, working in large organizations with pre-established rules prohibiting insolvent individuals from employment is not possible. Certain positions, particularly in government and political roles, are strictly off-limits to individuals who have experienced insolvency, even after they have been discharged from insolvency.

Can an insolvent person engage in financial transactions?

For funds under the control of the asset officer, no financial or transactional activities can be conducted.

This includes withdrawals, transfers, opening bank accounts, or obtaining loans. However, living expenses can still be managed using the living allowance, and new income in the future can be utilized.

Can an insolvent person get insurance?

Insurance cannot be obtained because it is considered a legal contract, unless permission is granted by the asset officer.

In the case where a debtor has purchased life insurance, paid the policy , and later becomes insolvent, the asset officer has the right to surrender or cash in the insurance policy to recover the outstanding debts.

Therefore, an insolvent person may forfeit their rights to their own life insurance, even if it was purchased and paid for before entering insolvency.

Can an insolvent person operate a business?

If insolvency persists even with an existing business, the individual cannot hold a position in a company.

Additionally, registering a new company as a legal entity is not possible, and it would require using another person’s name as the sole representative until the individual is discharged from insolvency.

summarize

Throughout the period of insolvency, the debtor must fully cooperate with the asset officer. If the insolvent person obstructs or hides assets from the authorities, whether an individual or a legal entity, they can face additional legal actions.

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