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Wife became Bankrupt without being Served. In limbo about our Property

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asked on Dec 31, 2019 at 02:25
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Hey Sifus. 

The articles and help has been so helpful. Its rare to see how much help strangers could provide. Bless you.

My wife recently got to know she was made Bankrupt when her saving account with a mere MYR2k plus was freezed. She panicked and was deeply affected by it. She made some calls to Insolvency and they revealed some info to her on the phone, that it just came into action end of Oct 2019.
It was filed by a creditor whom was a supplier of her cosmetic business whom is demanding payments way above 100k. It was a failed business way 4 years ago.
She has since been a house wife, making small trades online.
My humble question is :

1) She was not served by any lawyers, nor contacted even by the creditor. Perhaps some documents were sent to our old address, but her number remains unchanged. Is this even possible? I was googling about a new change in the act IA1967  3(2A) IA 1967 provides that notice need to be served personally to a debtor.

2) We have a joint property under both our names, but the Housing Loan is only under my name. Can insolvency wrestle away our property? The property is still fully loaded on loans.

3) Fumny thing is, today when i paid my loan instalment, my wifes name came out in the onlime bank account name. Its weird as usually i see only my name, since the loan is under me.

4)we manage to secure an appointment with the officer in charged of her case early Jan 2020. He seems friendly and very helpfull on the phone. He kept reminding her to do an Oath to declare how much is the income and request permission to open a new savings account.

Thanks in advance to all the Sifus kind advice. 

Daniel ( very worried )
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7 Answers

answered on Dec 31, 2019 at 02:27
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Just to add. I guess the creditor aka supplier of my wife is called an Unsecure Creditor. Are they strong enough to go to the end to get the property whom is co owned by my wife? Will Insolvency still wrestle it away knowing that the property still has a high loan amount?
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answered on Dec 31, 2019 at 11:56
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edited Dec 31, 2019 at 12:18
by   rara_
Just to add. I guess the creditor aka supplier of my wife is called an Unsecure Creditor. Are they strong enough to go to the end to get the property whom is co owned by my wife?
Yes, the creditor who bankrupted your wife is a unsecured creditor and they can only make claim by submitting Proof of Debt (POD) to Jabatan Insolvensi Malaysia (JIM) but the bank you took your housing loan from is a secured creditor.

When your wife (co owner of the house) become a bankrupt the loan will then be deem as default as written in the small print in agreement. The bank will eventually terminate the agreement and auction the house. 

1) She was not served by any lawyers, nor contacted even by the creditor. Perhaps some documents were sent to our old address, but her number remains unchanged.
Làw firm prefers to communicate by official letters and registers every letter that they sent as proof than using the phone.

They may have gotten court order to apply substitute service ( by advertising in local newspaper) to reach you. This is the norm where a judgement debtor couldn't be reached.
Big creditors normally delegate all this legal job to their law firm and so they are free from the hassle of contacting you personally thru the phone numbers.
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answered on Dec 31, 2019 at 16:52
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edited Dec 31, 2019 at 19:11
by   jeff005
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answered on Dec 31, 2019 at 22:08
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edited Dec 31, 2019 at 22:40
by   jeff005
@ Danieltan

new change in the act IA1967  3(2A) IA 1967
This was indeed a very good change. But how to served personally when a Creditor was not updated by any written notice of change of correspondence address. When bkcy laws requires a service by hand personally, the same is expected from Business and Financial Laws that a debtor must update the creditor of any changes in address. Tel nos and any msgs and emails are not accepted.

the creditor aka supplier of my wife is called an Unsecure Creditor. 
If the debtor did not sign any personal guarantee  to the business dealings, the creditor is deemed an unsecured creditor.

Will Insolvency still wrestle it away knowing that the property still has a high loan amount?
The Trustee (JIM) will not do it as it is a Joint Ownership which still have a high loan amount balance. Instead the borrowing bank is given the legal option of what to do with this property within a one year period as it has been charged to the bank. After the one year period the bola is tendang balik ke-JIM.

This accounts for the Housing loan acct whereby your wife's name appears first as it has been "Red-flag" and for sure this property cannot be sold while a Joint Owner is still under bkcy. The red flag /restriction /caveat will be removed once the bankrupt have been discharged.

He kept reminding her to do an Oath to declare how much is the income
This also applies to declarations of all Assets and Liabilities which includes secured and unsecured creditors. Secured Creditors are those whom the bankrupt has pledged collaterals to the borrower and/or have signed personal guarantees.

Other types of Creditors are required to file P.O.D. as per Statement of Affairs (SOA), filed under Oath to JIM.

However, your case, the this creditor is the entity that have make your wife a bankrupt, need not file P.O.D. The bkcy itself is the proof of debt.

(Caveat : The above comment is written by a Q&A registered User. It represents a personal point of view only and not be regarded as legal advice.)
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answered on Jan 1, 2020 at 11:00
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Thanks Jeff and Rara.
So now the status of my property depends on the bank if they will retract the loan? Will they know that my wife is bankcruped?

Regards
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answered on Jan 1, 2020 at 11:22
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edited Jan 1, 2020 at 11:27
by   jeff005
Danieltan

if they will retract the loan?
It all depends on the Policies of Individual Banks on their next course of action.

By virtue of Bankruptcy, your wife is co-owner, as such, 50% of any positive value goes to her estate in JIM. If there is a vast negative value, there is no point to enforce any actions at this point of time. But the Bank or JIM can wait until the value goes up to a very very higher value, then an action can be taken. The onus is to get out of bkcy asap.

Will they know that my wife is bankcruped?
They have already "told" you via the "Red Flag".
Once a person is adjudged a bankrupt, notifications from the Bkcy High Court will be send to Immigration, Insolvency and Bank Negara Malaysia.

If you have not read thru all the posts under this bkcy section, please do so. It is de ticket out of your sleepless nights.
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answered on Jan 3, 2020 at 16:33
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Thanks everyone. Appreciate all the information
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