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WHAT HAPPENS WHEN COURT DECLARES THAT A PERSON IS UNABLE TO PAY THEIR DEBTS ?.



Okello has always been a show-off. He was the first person to buy an original Arsenal jersey. When Johnny Walker became popular, he bought enough to feed a village to show the locals how rich he was,. He even bought an Alphard to show that his family could travel in style. Unknown to all those who admired him, Okello was knee-deep in mabanja (debts) to keep up this lifestyle. The people demanding him for money finally dragged him to court and the court declared that Okello was officially too poor to pay his debts (bankrupt). Although it was a shame, he did not mind because he thought it was just a title  until his life started changing for the worse. 


WHAT DOES THE LAW SAY?


When a person fails to repay their debts and they are sued (taken to court), they may be declared bankrupt by the court.  The court would then issue a court order known as a bankruptcy order. Although this means that the person does not have to struggle to repay all their debts immediately, it still has implications for that person. 


First, the person (like Okello) will no longer be in charge of dealing with their day to day affairs and property. The court will appoint someone called an ‘official receiver’. This person will take over the management of Okello’s property. 

This person will take over the property and assess how the debts are to be paid. In doing this, the official receiver will call all the creditors (those demanding money) and figure out how to clear the debt in an organized manner.


Secondly, all your property such as buildings and businesses will be transferred into the names of this official receiver. This does not mean the official receiver has taken your property as their own  but they do this so that it is easier to sell it off and settle the person's debts. This means that much as Okello has been given time to pay his debts, his life will significantly change as he will lose control over managing his property.


📷:Unsplash

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