Even if you make a debtor a bankrupt, they may not repay the amount they owe you in full.
Before filing a bankruptcy application against a debtor, you should consider the possible consequences and other options you can take.
The court will take into account all the relevant facts and circumstances as well as the applicable law to determine if a bankruptcy order will be made against the debtor.
If a bankruptcy order is not made, you (the applicant) may be ordered to bear the costs of the bankruptcy application.
Even if a bankruptcy order may be made, you should consider the consequences of a bankruptcy order. Some examples include (but are not limited to):
There is no guarantee that the full sum owed to you by the debtor will be repaid.
While the bankrupt is required to surrender their financial assets to a trustee (either the Official Assignee or a private trustee) who will supervise the debt repayment, there may not be enough to cover the full amount of debt.
Note: This does not apply to certain types of debts listed in Section 397 of the Insolvency, Restructuring and Dissolution Act (IRDA).
You should only apply to make the debtor a bankrupt after exhausting all other debt recovery options, which may include:
If you decide to proceed with the bankruptcy application against the debtor, you need to show that the debtor is unable to pay the debt. Refer to the conditions listed in Section 312 of the IRDA. One example is through a statutory demand.