About Bankruptcy Law in Colombo, Sri Lanka
Bankruptcy law in Colombo, Sri Lanka, also known as Insolvency Laws, fall under The Companies Act, No. 07 of 2007. This act describes the rules and procedures surrounding personal or commercial distress and bankruptcy. Under this law, failed individuals or businesses are administered for the benefit of their creditors. The court has the power to assign trustees and liquidators who can take control of the debtor's assets and manage the properties for creditors' benefits.
Why You May Need a Lawyer
Bankruptcy is a complex legal process, involving a lot of legal aspects as well as negotiations. You may require a lawyer under the following circumstances:
- If you have a large amount of debt and are unable to pay
- If you’re facing legal actions from creditors such as lawsuits, wage garnishments, or liens
- If you're unsure about the legal processes or need assistance in filing bankruptcy
- If you run a business and you're struggling financially where bankruptcy seems like a potential exit strategy.
Local Laws Overview
In Colombo, Sri Lanka, bankruptcy for individuals falls under section 402 of The Companies Act. If a debtor cannot repay his/her debts, the court deciphers if bankruptcy is correct. The court-appointed insolvency administrator takes over the bankrupted individual's assets and money to pay off the creditors. In the case of a company bankruptcy, liquidation under Sri Lankan law occurs. The assets of the insolvent company will be sold, and the proceeds will be distributed among the creditors.
Frequently Asked Questions
What does it mean when an individual is declared bankrupt?
When an individual is declared bankrupt, it means that the person is unable to meet his or her debt obligations and has filed a plea to be declared insolvent. The person in question's assets will be used to pay off the debt.
What types of debt are erased in personal bankruptcy?
Usually, personal bankruptcy covers unsecured debt such as credit card bills, medical bills, and unsecured personal loans. However, student loans, child support, alimony, and certain tax obligations cannot be "erased" in a bankruptcy proceeding.
Will the individual lose all their property in bankruptcy?
No, not necessarily. The law provides some exemptions that allow an individual to keep certain types of properties, depending on their values.
How long does a bankruptcy proceeding generally take?
The time it takes to process a bankruptcy application would depend on the complexity of each individual case. However, generally, a straight forward bankruptcy case may take approximately 6 months to one year to finalize.
What is the impact of bankruptcy on credit score?
Filing for bankruptcy will negatively impact your credit score and it will remain on your credit report for seven years in case of Chapter 13 bankruptcy or ten years in case of Chapter 7 bankruptcy.
Additional Resources
You may consult with the Department of the Registrar of Companies Sri Lanka, which maintains all records of businesses in the country including those that are bankrupt. Furthermore, the Department of Official Languages can provide information in your preferred language if necessary.
Next Steps
If you find yourself in need of legal assistance related to bankruptcy in Colombo, Sri Lanka, your next step should be to seek legal counsel. It is advised to contact a lawyer who specializes in insolvency and bankruptcy as they will be most equipped to guide you through the process. In addition, reach out to government bodies for advice and potential financial assistance during this process.
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The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
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