Debts are often one of the problems in relation to gambling. The gamblers and families frequently have difficulties in relieving the immense finance strain and fears of the threats in debt collection. Below are descriptions of different means to manage debts and handle debt collection.

Debt management

Debt Consolidation

If you or your family has multiple debts that are hard to manage, then consolidating multiple loans and bills into one could be an option. More...Consolidating debts into a loan with lower interest rate can save interest cost and facilitate your monthly debt management. This can also extend the loan repayment period to lower the amount of monthly repayment.

However, before you or your family decides to consolidate multiple debts, you should be aware of the following:

  • Banks usually set a prerequisite of applicants having a certain range of credit score for approval. Applicants with lower credit score might be banned or approved for a scheme with higher interest rate.
  • Applicants should ensure the final interest rate, including admin fee and all other costs, is more affordable than the previous ones.
  • If unsecured loans (such as credit card bills) become secured loans (such as second mortgages), you or your family risks the assets being claimed if you default on your loan repayments. Prudent considerations are advised.
  • Consolidating multiple short-termed loans into one long-termed loan could reduce the monthly interest rate, but the total cost could be higher than without debt consolidation.
Debt Relief Plan (DRP)

Debt relief plan (DRP) is one of the ways to manage debt without going bankrupt so you or your family would not have restraints from bankruptcy or deprivation from practising in certain professionals, more...for example, an insurance agent, a banking staff, and an accountant, etc. You or your family needs to personally negotiate with the associated banks and finance companies concerning the new repayment terms (such as transforming credit card bills into personal loans), the feasibility of reducing interest rate (such as 25% per annum to 15% per annum) and extending the personal loan repayment (such as from 24 instalments to 48 instalments). These enable you or your family to repay debts gradually. However, not all banks or finance companies accept DRP so you or your family needs to prepare for back-up plans in case DRP is not accepted. Currently there are organizations or companies specializing in representing debtors to apply for DRP.

Before you or your family decides to adopt this way to manage debts, please note the following basic conditions for DRP:

  • Stable job and income with adequate income proof
  • Upon deducting basic daily expenses, the monthly loan repayment takes up 30%-50% of monthly income
  • The debts are not newly borrowed. Made efforts to repaid for about half a year
  • Calculated by 5-15% per annum interest rate, all loans could be settled in 3-5 years
  • Applicants are sincere in repaying loans with plans, such as willing to provide all information related to loans, income, family background and reasons for debts
Interbank Debt Relief Plan (IDRP)

Interbank debt relief plan (IDRP) is similar to DRP. They are options other than bankruptcy, more...that aim to lessen stress from you or your family in loan repayments by saving monthly interests and extending loan repayment periods. IDRP is different from DRP as you or your family only needs to negotiate with the major creditor (i.e. the lead bank). If the major creditor is willing to accept the debtor’s repayment proposal and other creditors also agree with the proposal, then the major creditor will integrate the all debtor’s loans.  Debtor could repay loans with fixed interest rate to the major creditor according to the accepted proposal. Debtor could arrange IDRP with the major creditor through referral from other creditors, lawyer or consultant agency.

However, not all banks or finance companies accept IDRP. IDRP does not apply to personal loans and illegal loans. You or your family needs to prepare for back-up plans in case IDRP is not accepted.

Individual Voluntary Arrangement (IVA)

Individual voluntary arrangement (IVA) is a loan repayment plan to a nominee, more...(usually an accountant or lawyer), who would then file an application to court. If a call for creditors’ meeting is necessary, the repayment proposal must obtain at least 75% of the creditors’ approval. The nominee will also be the supervisor in supervising the agreements between both parties. Applicants will be responsible for all the expenses, charges and salaries in association with the IVA, and pay an initial fee of $12,150 to the nominee. Applicants are recommended to compare and enquire differences among different nominees and other charges in order to make a decision suitable for own situations.


If you or your family cannot afford repaying the debts and alternatives such as Debt Relief Plan (DRP) or Individual Voluntary Arrangement (IVA) are inapplicable, then bankruptcy can be considered. More...Prior to filing for bankruptcy, it is noteworthy that the Official Receiver will be the Provisional Trustee upon the making of the Bankruptcy Order. The Official Receiver may appoint any qualified person as Provisional Trustee if the assets of the bankrupt do not exceed $200,000. The trustee will take over all the assets of the bankrupt and have power to sell the assets to distribute shares to creditors. Creditors are not allowed to take or continue legal actions to the bankrupt or his/her assets without permission from the court.

You or your family should note the following issues related to bankruptcy:

  • Bankruptcy Order usually lasts for four years, and maximum eight years
  • All assets under the name of the bankrupt would be sold, potentially include joint tenancy
  • The bankrupt’s career could be affected, such as being a lawyer, an estate agent, an insurance agent, a security dealer or a director of the board in a limited company
  • The credit rating of the bankrupt will be affected
  • Fees (basic fees for self-application)
    • Official Receiver’s Office - $8000
    • High Court - $1045
  • Waiting time for court hearing is about 2 months
Implications of bankruptcy

Once a Bankruptcy Order is made until discharge, the bankrupt will be bound by the following restrictions:

  • Be listed as a bankrupt for 4-8 years (5 years if previously been adjudged bankrupt), during which the Official Receiver (or Trustee) would take over your financial problems
  • Not buy luxurious items, for instance properties and automobiles
  • Not apply for further loans
  • Provident Fund (ORSO) could be used to repay debts but not Mandatory Provident Fund (MPF)
  • Credit report will state public information about the bankruptcy
  • During bankruptcy, the bankrupt is refrained from being the Director of board or management of business, as well as certain professions
  • Once a Bankruptcy Order is made, Official Receiver will post the Bankruptcy Order in the Gazette and two newspapers (one Chinese and one English)

The following compares and contrasts various means in managing debts:

Debt consolidation, DRP, IDRP
  • No court proceedings, no court or bankruptcy record
  • It has court proceedings and record but no bankruptcy record
  • It has court proceedings and bankruptcy record, with restraints bound by Bankruptcy Order
Debt consolidation
  • As soon as immediate
  • About 2-4 weeks
  • About 4-8 weeks
Debt consolidation, DRP
  • Approach creditor directly and obtain its approval. Fixed interest rate, regular repayment of regular amount
  • Obtain approval from the major creditor and other creditors. Fixed interest rate, regular repayment of regular amount
  • Obtain approval from 75% of creditors. Draft a repayment plan via nominee and repay regular amount with fixed interest rate regularly
  • No repayment when Bankruptcy Order was made. Trustee takes over income and assets for repayment.
Debt consolidation
  • Need to clear debt in 6 years maximum
  • Need to clear all debts in 5 years maximum.
  • Need to clear all debts in 5 years.
  • Need to clear debts in 4-8 years, if applicable
Debt consolidation, DRP, IDRP, IVA
  • Yes
  • No
Enter and
Exit HK
Debt consolidation, DRP, IDRP, IVA
  • Enjoy freedom to enter and exit HK
  • Need approval of Official Receiver and inform the sources of traveling fares
Loan Debt consolidation, DRP, IDRP
  • No restrictions and record
  • No bankruptcy record, finance companies keep IVA record for 5 years
  • Not allowed to apply for credit card, personal loans, or buy insurance
Current job Debt consolidation, DRP, IDRP, IVA
  • No significant impact besides certain finance companies
  • Bankrupts may have licenses revoked or expelled from current positions, such as insurance agents, disciplinary force, etc.
Professionals Debt consolidation, DRP, IDRP, IVA
  • No significant impact besides certain finance companies
  • Not able to take up some professions during the period of Bankruptcy Order, such as accountant and director of board.
Debt consolidation, DRP, IDRP, IVA
  • 4-7 years, depending on debt amounts and repayment plans
  • 4-8 years, depending on the conduct during Bankruptcy Order
Fees Debt consolidation
  • $0
  • No fees for self-application. About $5000-$10000 for agents if applicable.
  • About $20000 - $30000
  • About $9000 - $20000

Debt Collection

In case you or your family fail to repay loans, creditors including banks, credit card issuers, or money lenders, can exercise any legal recovery methods as stated in the contract you or your family signed for the loan.

Lenders’ rights to collect debts

Creditors may recover loan defaults via debt-collection agency (DCA). Under the Code of Banking Practice, a creditor needs to give you advance written notice that a DCA will be hired to collect your overdue debts. The notice needs to include details of the overdue loans, the length of overdue time, the costs for recovering debts, and the contact information of the creditor’s debt recovery department. It must also advice actions in case a DCA attempts illegal recovery methods.

Right of set-off

Right of set-off is an important entitlement for creditors to pursue debts. Banks have the right to draw money from the debtor’s accounts to set-off the overdue loans. When the bank exercises this right, no signed cheques would be honoured.

However, there are limitations for bank’s right of set-off. For example, the loan contract needs to specifically state if the money in a joint account can be set-off. Some deposits, such as trust accounts, cannot be set-off.

Dealing with debt collectors

DCAs have to comply with the Code of Banking Practice guidelines as issued by the Hong Kong Monetary Authority. When hiring DCAs, Securities and Futures Commission (SFC)-licensed corporations and creditors must abide by the debt collection guidelines issued by the SFC and the Code of practice issued by the Licensed Money Lenders Association Limited, respectively.

DCAs must not attempt to pursue debts from anyone other than debtors or guarantors. They are forbidden to use strategies intended to humiliate or harass the debtors, families, or anyone else to collect debts. It is illegal for DCAs to engage in violence of any form of physical intimidation.

When a DCA approach you or your family, ask them the amount of debts and whom you owe to. In case the information is not specific and accurate, you should contact the creditor to verify the information.

If you perceive the money collection methods used by the DCA inconsistent with the requirements as stated in the Code of Banking Practice, you may make a complaint to the authority. If you find the authority’s manner in handling your complaint dissatisfactory, you may seek help from the Complaints Processing Centre of the Hong Kong Monetary Authority. If you want to complain a Licensed Money Lender, you may contact the Licensed Money Lenders Association.

Referenced from the Chin Family