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Filing Bankruptcy in the Philippines - An Option or Not for Debt-Stricken OFWs A very concerned individual has asked this

question in behalf of the many Filipi na working as domestic workers in Hong Kong who had been taken advantage of by e mployment agencies and others, and many owe huge debts far more than they are ever likely to be able to pay. The requestor of advice is a foreigner who is knowled geable about bankruptcy law in his country. He wants to know, if under Philippin e law, these Filipina women can file a bankruptcy and if the bankruptcy proceedi ng is a practical method for a person to get out of the burden of debts. He also wants to know if the person residing in Hong Kong would need to return to the P hilippines in order to file bankruptcy. I replied to the query as follows: Please know that on so I honestly asis of my reply person to advice in my ten years of practice, I have not encountered this questi do not know the actual procedure in availing this remedy. The b is book knowledge and not experience so I may not be the right you on the practicality of the approach.

Bankruptcy law in the Philippines is called the Insolvency Law under Act No. 195 6 which took effect on May 20, 1909. The intention of the law-making power, in e nacting the Insolvency Law, is to provide an adequate remedy for all creditors o f a person who becomes insolvent. The law allows individuals or businesses ("deb tors") who owe others ("creditors") more money than they're able to pay to eithe r work out a plan to repay the money over time (or suspend payment) or completel y eliminate ("discharge") most of the debts by filing either a Voluntary Insolve ncy or an Involuntary Insolvency. In Voluntary Insolvency, an insolvent debtor, owing debts may apply to be discha rged from his debts and liabilities by petition to the Regional Trial Court in t he province or city in which he has resided for six months next preceding the fi ling of such petition. In his petition he shall set forth his of residence, the period of his residence therein immediately prior to filing said petition, his i nability to pay all his debts in full, his willingness to surrender all his prop erty, estate, and effects not exempt from execution for the benefit of his credi tors, and an application to be adjudged an insolvent. He shall annex to his peti tion a schedule and inventory in the form herein-after provided. The filing of s uch petition shall be an act of insolvency. The said schedule must contain a full and true statement of all his debts and li abilities, together with a list of all those to whom, to the best of his knowled ge and belief, said debts or liabilities are due, the place of residence of his creditors and the sum due each the nature of the indebtedness or liability and w hether founded on written security, obligation, contract or otherwise, the true cause and consideration thereof, the time and place when and where such indebted ness or liability accrued, a declaration of any existing pledge, lien, mortgage, judgment, or other security for the payment of the debt or liability, and an ou tline of the facts giving rise or which might give rise to a cause of action aga inst such insolvent debtor. The said inventory must contain, besides the creditors, an accurate description of all the real and personal property, estate, and effects of the petitioner, in cluding his homestead, if any, together with a statement of the value of each it em of said property, estate, and effects and its location, and a statement of th e encumbrances thereon. All property exempt by law from execution 2 shall be set out in said inventory with a statement of its valuation, location, and the encu mbrances thereon, if any. The inventory shall contain an outline of the facts gi ving rise, or which might give rise, to a right of action in favor of the insolv ent debtor.

Based on my reading of the above cited provisions of the law, I frankly do not t hink that filing of an Insolvency proceeding is a practical approach. In fact, I wonder if this remedy is ever availed of at present times. You will note that t he law was enacted in 1909, but when I checked the jurisprudence on the matter, the latest decision by the Supreme Court was dated way back 1940s. I found, howe ver, a question on insolvency in the 2005 Bar Examinations. So my conclusion is this: no one is availing of the insolvency proceedings at present times and any reference to the law is only for educational exercise. As provided in the provisions, the Insolvency proceeding is commenced by filing a petition in a Regional Trial Court in a province or city where the petitioner has resided for the six months prior to the filing of the petition. This means t hat the Filipina has to hire a lawyer to prepare the petition and for her to per sonally sign the petition. The signing of the petition cannot be delegated to a representative even if the attorney in-fact is the lawyer himself. The court would not be able to acquire jurisdiction over the person until and unless a verified petition is filed in Court. Source: ines-option.html