Bankruptcy means that you are unable to pay your debts due to a variety of reasons like mismanagement of funds, poor planning etc. Bankruptcy in Kenya is provided under the insolvency Act .Filing for bankruptcy can afford you total relief from your creditors or you are given a time frame that will be enough for you to seek funds and clear your debts.
This article will provide the steps to follow when filing for bankruptcy in Kenya.
The first step will depend on whether the debtor or the creditor files a bankruptcy petition with the court. If the debtor files the petition, then this means he/she has accepted that they are unable to pay their debts substantially to their creditors. If on the other hand the creditor files the bankruptcy motion, he/she must prove that the act of bankruptcy occurred within the last three months before filing and that the debtor is unable to pay what they owe.
After the petition(the courts in Kenya typically handle bankruptcy cases) has been filed, the court will issue a receiving order which means that the debtor’s property will be confiscated and kept safe pending the results of the bankruptcy motion.
The creditors will then have a meeting to deliberate on whether the debtors’ proposal for payment is deemed acceptable. If not, the matter is referred back to the court for a process called adjudication. Adjudication is making an official decision about a problem or disagreement. This means that the court will decide on that and will thereafter make the debtor bankrupt by adjudication order.
A trustee will be required to handle the debtor’s property during the proceedings. If the creditors prove beyond reasonable doubt that the debtor has been unable to pay what they owe, the trustee will divide the property equally between the creditor or creditors. The debtor has to undergo a Judicial Public Examination and afterwards may apply for discharge from his creditors.
If a court grants a debtor discharge from his creditors, It means he/she is no longer indebted to their creditors. The debtor is then freed from sanctions imposed when they filed for bankruptcy. The court will deliberate on which debts the debtor will be freed from as some will still remain even after court discharge.
The process of filing for bankruptcy under the insolvency act in Kenya is fairly straightforward. You will require a lawyer to represent you if you do not have a legal background. I’d suggest a skilled one. Two outcomes are guaranteed. Either all of your assets will be confiscated and shared equally among your creditors or you will be cleared of all debt. Filing for bankruptcy allows you to keep your creditors at bay either temporarily or permanently. Those are the steps to follow when filing for bankruptcy in Kenya. It is a good move according to your financial status as you can start to account for your debts immediately rather than let your debts accumulate.