Illiteracy and Credit Card Problems Boost Bankruptcy Shield | Main stories

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The Office of the Insolvency Supervisor (OSI) reported that since the COVID-19 pandemic, 44 people and businesses have applied for protection under its regime.

The OSI is a department of the Ministry of Industry, Investment and Trade, which has the power to authorize practitioners to supervise the administration of insolvent assets and to ensure that trustees act in accordance with the insolvency law.

The OSI explained that the primary reason for personal protection or bankruptcy filings continues to be financial illiteracy and the inappropriate use of credit.

“People continually borrow to meet reasonable personal expenses. In other words, to supplement their salaries. Over time, monthly loan repayments alone account for 65% of income, making it difficult for them to meet their other monthly obligations as they come due,” OSI said in an email response.

Last year, 19 individuals and 10 companies filed for bankruptcy, while two individual filings have been made since 2022.

During the first six months of the pandemic, from March to August 2020, the appointment of directors was suspended. Therefore, no deposit was made.

Later in 2020, 13 bankruptcy filings were filed, the majority (10) by individuals.

Companies that filed for bankruptcy in 2021 fall within the fashion, tourism, entertainment, mining, manufacturing and airline sectors.

Among entities, 39% of filings were small businesses.

However, in 2020, the medium-sized companies that filed for bankruptcy were in the marketing and advertising sector.

The largest deposit for 2021 was around $1 billion.

Meanwhile, the average amount deposited by individuals was $27 million.

In 2020, average retail deposits were $4.2 million.

For businesses, the average amount deposited was $208 million, an increase from $78.3 million in 2020.

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