Q MY BROTHER bought a condominium unit in 2002. He included my sister-in-law's name as his joint tenant.
She became bankrupt last year because her business failed. She was a partner in the business.
How long will it take for her to be discharged from bankruptcy?
How will the condominium unit that my brother purchased be affected?
Can the Official Assignee (OA) take possession of it? Is it possible to remove her name from the property now to avoid complications?
A A discharge from bankruptcy may be done either by an application to the court or by a certificate issued by the OA.
The court may grant either an absolute discharge or a conditional discharge.
In the former case, the bankrupt is free from any further obligations, whereas in the latter, the court may attach conditions such as requiring him to pay dividends of at least 25 per cent as well as make contributions from his post-discharge income.
The court takes into account such factors as the age of the bankrupt, the cause of the bankruptcy and his blameworthiness in incurring the debts, the number of creditors and the value of the bankrupt's assets against his liabilities.
The court may refuse to allow the discharge, as happened in past cases where the debt ran into millions and the bankrupt went into hiding.
For a discharge by certificate of the OA, the OA generally reviews all cases where there is a bankruptcy of at least three years and the debts are less than $500,000.
The OA also takes into account the same factors that the court considers, and also looks at the bankrupt's conduct and level of cooperation.
In both situations, the creditors have to be notified and they are entitled to object.
If the OA rejects the objections, the creditors can go to court for an order prohibiting the OA from granting the certificate.
As both situations involve the exercise of discretion, the interests of the bankrupt are balanced against those of the creditors, the public and commercial morality or common honesty.
As a bankrupt, all of your sister-in-law's property vests automatically in the OA without the need for any further conveyance, assignment or transfer. In short, she no longer owns anything in the condominium and any attempt by her to dispose of her property is void because she has no title to pass or give.
Even if this jointly-owned property is a matrimonial home, your sister-in-law's interest will still form part of her estate available for distribution to creditors. An HDB flat is exempted and in that sense is safe from the consequences of bankruptcy provided both the owners are Singapore citizens.
If the HDB flat is wholly or jointly owned by a permanent resident, then the bankrupt's interest will vest in the OA as well.
The OA has a duty to call in the bankrupt's estate and hence would write to the bank, although the bank would have found out about your sister-in-law's bankruptcy by now. There may be a forced sale of the condominium as the bank, as a secured creditor, is entitled to recover its loan.
Rather than a forced sale, your sister may persuade the OA to allow her to sell the condominium privately if that will fetch a better price.
Amolat Singh
Lawyer
Amolat & Partners
