Many people believe that when an individual declares bankruptcy, they completely lose their right to manage any of their assets and are entirely prohibited from using them.
However, the reality is different. Both the UAE and Egyptian legislatures have considered the humanitarian aspect of the debtor, which is why bankrupt individuals and their families are permitted to receive allowances from the bankruptcy estate, even if these funds are insufficient to cover their debts.
Nonetheless, this does not mean that the bankrupt individual can freely dispose of the bankruptcy estate assets. The purpose of bankruptcy proceedings is to organize the individual’s financial situation, not to grant them unrestricted control over their assets.
Therefore, the use of bankruptcy estate funds is closely monitored by the appointed judge. The judge determines the amount of assistance that the bankrupt individual and their family can receive, which is limited to essential needs such as housing, food, healthcare, and education. The judge may also impose conditions for receiving this assistance, such as participation in rehabilitation programs or job search activities. Failure to adhere to these conditions may result in the suspension of assistance.
In this way, the law balances the protection of creditors’ rights with ensuring a minimum level of dignity for the bankrupt individual and their family.
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