By BK Sidhu | The Star | Malaysia |
WOULD you rather lose your only home that provides shelter to you and your loved ones or find ways to safeguard it.
The ongoing Covid-19 pandemic is certainly not helping as it has led many to lose jobs and take pay cuts, leading to financial instability.
With that, repaying loans and mortgages may not be a priority for some. Even though the moratorium is a huge relief, a loan or mortgage needs to be repaid sooner or later with accrued interest.
Defaulting and refusing to repay loans and mortgages can lead to severe consequences if you are declared bankrupt.
Then the assets under your name will be acquired by the Official Assignee and sold or converted to cash.
The payment is then made on a prorated basis to the creditor. Normally, for houses which are charged, the chargee bank takes priority.
Avoid getting into such situations. Not only does it affect your credit worthiness, it also leaves a stigma and can be a traumatic experience emotionally.
“Life really isn’t quite the same anymore when one is declared a bankrupt in this country,’’ Soffskills Network founder and licenced professional counselor Heeran Kaur said.
“Being declared a bankrupt can bring on tremendous emotional and psychological stress. Our self-worth and security are often closely related to our financial health,’’ she said.
When a person is unable to pay his debt, he is deemed insolvent but not bankrupt yet. Before being adjudged bankrupt, it is best for the debtor to negotiate a deal with his creditors which does not involve the sale of his house, said lawyer Bhavanash Sharma.
“Propose an installment plan to settle the debt or propose a voluntary arrangement in accordance with the Insolvency Act 1967 with the creditors at any time before being declared adjudged bankrupt to avoid losing your home,’’ he said.
Heeran warns about “unverified debt settlement and debt relief companies that may “promise’’ to negotiate with creditors, but in turn a debtor may get stuck with more fees or additional interest payments.
Read the full article, ‘Saving your only home’ (The Star, 19 July 2021), here. Heeran, a Malaysia-based counsellor and therapist, also writes a regular column for Asia Samachar.
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