If you are seriously indebted, filing for bankruptcy may relieve your financial burden, but there are consequences to bear. Therefore, bankruptcy should be the last resort when you have run out of all other options. Learn more about bankruptcy

Bankruptcy is not the one and only way to resolve debt problems. Depending on the seriousness of the debts and individual circumstances, a debtor can consider other alternatives, for example a Debt Relief Plan and Individual Voluntary Arrangement.

A DRP is an arrangement initiated by the debtor, who proposes a way to repay creditors with the objective of eliminating the debts according to his/her repayment ability. Over the course, the debtor contacts the creditor directly and no professional fees are required under a DRP.

Under the IVA, a debtor commissions a professional to propose a repayment plan to creditors, with the objective of eliminating the debts according to his/her repayment ability. The application concerned must be approved by a court and the decision is legally binding on all creditors. Details of individuals who have successfully applied for an IVA are publicly recorded in the specific register of the Official Receiver’s Office, which is searchable by the public.

Whether the debtor is applying for a DRP or IVA, credit cards cannot be kept. Generally, half of the salary is used for repaying the debts every month. All debts must be settled within 3 to 5 years. The application process is not easy. Individuals in need can contact debt counselling centres (for example, Caritas Family Crisis Support Centre, Tung Wah Group of Hospitals Healthy Budgeting Family Debt Counselling Centre) to seek help and learn more about the details of the DRP and IVA.