Debt settlement process
The debt settlement procedure (short: SRV) is a procedure of the Austrian insolvency law . Colloquially it is often referred to as personal bankruptcy . This possibility of debt relief for private individuals has been available in Austria since 1995. The aim of the procedure is to give honest and motivated debtors a realistic chance of a new economic start. The debt settlement procedure was extensively amended with effect from November 1, 2017.
History and meaning
Personal bankruptcy (bankruptcy law for consumers; judicial debt settlement procedure) was introduced in Austria in 1995. The basic idea of personal bankruptcy: Debtors pay the amounts they can afford over a certain period of time. During this time, only a modest but humane lifestyle should be possible. If the agreed payments and other obligations are met, debtors are again free of debt after the procedure has ended (= discharge of residual debt ). The creditors will receive - if possible - a portion of their debts, the rest they need to do without. The aim of the judicial debt settlement process is therefore to give honest and motivated debtors the realistic chance of a new economic start.
Until the end of October 2017, the duration of the proceedings in private bankruptcy was seven years. In order to achieve debt relief, at least 10% of the debt had to be repaid (the so-called minimum quota). The Insolvency Law Amendment Act brought a reform of the insolvency code into effect on November 1, 2017 . As a result, the minimum quota was abolished and the duration of the levy procedure was reduced to five years.
Procedure
The prerequisites for opening a personal bankruptcy include the actual insolvency of the debtor and the obligation not to incur any new debt. The application and procedure for a personal bankruptcy is regulated in the bankruptcy code. The district courts are usually responsible .
With the reform, the attempt to settle out of court before bankruptcy is opened is no longer mandatory. An out-of-court settlement requires the consent of all creditors: They waive part of their claims, debtors pay the agreed quota immediately or in installments and are then released from their remaining debts. The content of the out-of-court settlement corresponds in many respects to the private judicial bankruptcy, only it is negotiated and concluded “outside the court”.
Opening of bankruptcy and asset realization
After bankruptcy has been opened, there is an asset realization. All of the debtor's assets (house, car, savings account, etc.) are used. Executions and interest are stopped.
Payment schedule
If there is attachable income, the creditors must be offered a payment plan that corresponds at least to the income situation for the next five years. The maximum duration may not exceed seven years. The payment plan is deemed to have been accepted if the majority of the creditors agree. The debtors are again free of debt if the agreed payments and legal criteria are met. Creditors get part of their claims back. According to Section 194 (2) IO (i. D. IRÄG 2017) no payment plan needs to be offered if debtors are unlikely to have any attachable income in the next five years or if the income only slightly exceeds the subsistence level. The insignificance should be assessed according to the circumstances of the individual case. The de minimis limits in accordance with Section 292j (5) EO (10 euros) and Section 6a (3) GEG (20 euros) provide a guide here.
Skimming procedure
If the payment plan is rejected by the creditors, debt relief - even against the will of the creditors - is possible in the skimming procedure. The attachable part of the income is withheld for a period of five years. The remaining debt is then discharged. Debt discharge without repayment is also possible if no attachable income is available. Over-indebted people who have no attachable income (or only “slightly” above it) can skip the negotiations on the payment plan and go straight to the five-year levy. However, they must provide the court with information about their efforts to gain employment at least once a year: According to Section 210 (1) 5a IO, debtors without attachable income have to inform the court and the trustee at least once a year about their efforts at times determined by the court to report employment. If the information is not provided, the court has to grant a grace period of 14 days for comments.
Transitional arrangements
The amendment to the Insolvency Code also created transitional regulations for existing proceedings, which means that people who began their insolvency under the old regulations can benefit from the elimination of the minimum quota and the shortening of the duration of the proceedings. Existing skimming procedures will continue to run for a maximum of another five years from November 1, 2017 (unless they normally end earlier). They too can then obtain discharge of residual debt without a minimum quota.
Existing payment plans can be changed upon request in order to be able to switch to the new regulations: § 281 IO i. d. F. IRÄG 2017 includes for payment plans whose term has not yet expired on November 1, 2017, a right to a renewed vote on a payment plan and initiation of a skimming procedure. If debtors submit such an application, the provisions of the IO according to IRÄG 2017 are to be applied to the payment plan and levy procedure.
All those whose skimming has recently failed due to the minimum quota can apply for bankruptcy again immediately. This is also an exception, because there is a blocking period of 20 years before a new bankruptcy application can be filed.
For proceedings that ended in the past with discharge of residual debts or were discontinued prematurely due to a breach of obligations, the blocking period of 20 years according to the old legal situation remains unchanged. The ten-year blocking period of Section 194 (2) Z4 IO for submitting a new payment plan is subject to Section 279 (2) i. d. F. IRÄG 2017 only to be applied in these cases. It does not apply if a previous skimming procedure failed due to the minimum quota.