Debt owed by a third party to a bankrupt

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asked on Feb 10, 2021 at 02:00
edited on Nov 24, 2021 at 10:16
I was adjudicated bankrupt in January 2020 for an amount of RM 150,000 and as for now,  I wish to commence a legal suit against another party for RM 750,000 owed to me by another party

I was made understood it is possible for a bankrupt to sue after getting a sanction from Insolvency Dept. If the court awards in my favor,

1. Where the money goes if the defendant pays everything off? 

2. If the defendant defaulted,by not appearing at all, and I obtained a judgement against him, will the judgment order be useful in anyway against my bankrupt status.

Please enlighten me.
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1 Answers

answered on Feb 10, 2021 at 11:52
edited Nov 24, 2021 at 10:19

Basic personal opinion of your questions:

1. Where the money goes if the defendant pays everything off?
The awarded Judgement debt and if can collect any monies, any recovered sum will be sent into the bankrupt's estate in Jabatan Insolvensi Malaysia. If there are any excess and managed to pay off all Proof of Debt creditors, the any balance will be "refunded" to the discharged bankrupt.

2. The Judgment in Default Order is just academically useful only when you are discharged from the bankruptcy status and launch a bankruptcy lawsuit against that debtor. It is useless if it this a highly contested lawsuit of which in the eyes of JIM that you do not have funds to file another lawsuit (unless it is a multiple creditors lawsuit). Any excess fund that you possess now will be utilized to repay your own current Proof of Debt creditors.

Another issue is that whether you have declared this "debtor" of yours when you file your Statement of Affairs at point of reporting to Jabatan Insolvensi Malaysia. Non declaration could render your lawsuit quite difficult to commence. If you have "declared", Jabatan Insolvensi Malaysia would initiate your the lawsuit on behalf of your estate as the this amount exceeded your bankruptcy amount.
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