Debt discharge

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The discharge of residual debts is a possibility provided in the legal systems of many countries to have debtors released after a few years of debts that they cannot pay.

The EU restructuring directive stipulates a maximum period of 3 years for the debt relief of entrepreneurs. The EU member states have to implement the relevant regulations by July 2021.

Germany

The discharge of remaining debts has been an instrument of German insolvency law since the insolvency regulation came into force on January 1, 1999. It enables indebted natural persons on request to become debt - free after a phase of good conduct . The discharge of residual debt is regulated in the eighth part of the insolvency regulation of the same name ( §§ 286 ff. InsO). Under German law there is no discharge of residual debt for legal persons . A legal person who no longer has any assets after the insolvency procedure is a danger to legal transactions. It is deleted ex officio according to § 394 FamFG . With the extinction of the debtor, the debt also extinguishes.

meaning

In the event of the debtor's insolvency , despite the realization of his assets, the liabilities can usually only be partially met, namely in the amount of the so-called insolvency rate . The earlier bankruptcy rules were shaped by the principle of unlimited additional claims. Insofar as the claims in the insolvency proceedings were not met, they could continue to be enforced after the proceedings were concluded (see individual foreclosure ). The debtor was exposed to the claims of his creditors and corresponding enforcement measures up to the seizure exemption limit until the end of the 30-year limitation period . In the legal system of the Federal Republic of Germany, this situation was not only regarded as unacceptable for the debtor whose life was without any prospects or hope of recovery. The then Federal Minister of Justice, Hans A. Engelhard , reported criticism of this in 1986 . In the absence of an incentive for the debtor to become more gainfully employed, the creditors had little prospect of being able to enforce the remaining claims.

The honest debtor should now have the chance of a fresh start. In combination with the subsequently introduced possibility of deferred payment of legal costs ( § 4a Insolvency) of the previous insolvency proceedings, the remaining debts was interesting for the large number of debtors whose assets would not even cover the costs. The deferral of procedural costs can be granted even if the lack of assets was culpably caused.

During the residual debt discharge procedure (also called residual debt discharge phase or good conduct period) the debtor has to fulfill the obligations of § 295 InsO. A violation of these obligations can lead to refusal in accordance with § 296 InsO. The prerequisite for this is that this is requested by an insolvency creditor and that the debtor's breach of obligations affects the satisfaction of the insolvency creditors.

Procedure

The residual debt can be discharged as part of standard insolvency proceedings ; More often, however, it is the simplified consumer insolvency procedure that is carried out with the aim of the subsequent discharge of residual debt.

introduction

The procedure begins with the debtor's application to grant discharge of the remaining debt. The application should be made together with the application for insolvency, Section 287 (1) InsO. A personal application is always required. The insolvency court decides on this application by resolution, § 289 InsO. At the request of an insolvency creditor, the discharge of the remaining debts fails, in particular if

  • the debtor has been legally convicted of an insolvency offense ( Sections 283 - 283c StGB ) (see bankruptcy ),
  • the debtor has given false information in certain contexts in the last three years before the application to open insolvency proceedings,
  • the debtor violated his duty to provide information or to cooperate during the insolvency proceedings.

The reasons for refusal are finally listed in Section 290 InsO. If this is not the case, the court will determine that the debtor will obtain discharge from the remaining debt if he behaves accordingly. At the same time one is trustee determines the debtor be seizable income for six years in accordance with the declaration of assignment ( § 287 para. 2 InsO) assigns .

If there are effective wage and salary assignments, they will end on the day the bankruptcy is opened, since the so-called banking privilege of Section 114 InsO no longer applies in July 2014. The insolvency creditors are not allowed to enforce the debtor's assets ( Section 294 (1) InsO).

Assignment period

The insolvency regulation provides for a discharge of residual debt only for the honest debtor ( § 1 sentence 2 InsO). He has to prove his honesty on the one hand by assigning the attachable part of his income and on the other hand by fulfilling certain obligations. The debtor submits the declaration to assign his attachable income to a trustee for an initial period of six years from the opening of insolvency proceedings. However, this period can later be shortened to five or even three years ( Section 300 InsO).

The trustee is appointed by the court; However, both the debtor and the creditors are entitled to make proposals ( Section 288 sentence 1 InsO). The obligations to be fulfilled by the debtor are regulated in § 287b and § 295 InsO. These specify that he

  • to seek appropriate gainful employment or self- employment during the entire assignment period, more precisely: from the beginning of the assignment period until the end of the insolvency proceedings (Section 287b), as well as between the end of the insolvency proceedings and the end of the assignment period (Section 295 (1) no.1), and does not have to refuse a reasonable activity, as well as
  • has to surrender half of the inheritance to the trustee in the period between the end of the insolvency proceedings and the end of the assignment period. He has to indicate a change of residence, not to conceal his salary and to use it for the equal satisfaction of creditors (§ 295 paragraph 1 number 2 ff.).

If the debtor is self-employed, he is obliged under Section 295 (2) to make payments to the bankruptcy creditors as if he had entered into an appropriate employment relationship. It is not relevant here what profit the trader makes, but rather what income he could achieve in an employment relationship. School and professional training, age and professional experience are used as a yardstick for this. From this, a fictitious net income is formed, from which the garnishment amount to be paid to the trustee is determined each month.

Granting of the remaining debt discharge

If the regular assignment period of six years has passed without an early termination, the bankruptcy court decides after hearing the bankruptcy creditors, the insolvency administrator , the trustee and the debtor himself through a resolution on the granting of the residual debt ( § 300 para. 1 InsO). The court can also grant discharge of the remaining debt if the costs of the proceedings have not yet been paid. Under certain conditions, discharge of residual debt can also be granted before the six-year assignment period has expired. After the changes made by the law to shorten the residual debt discharge procedure and to strengthen the rights of creditors , the following options now exist ( Section 300 (1) No. 1–3):

  • Remaining debt discharge can be granted at any time before the expiry of the assignment period if the procedural costs have been paid and all other mass claims ( Section 55 InsO) and all insolvency claims have been satisfied. If these requirements are met, the debtor can only be released from the claims of the creditors who did not participate in the insolvency proceedings, since all other claims have already been settled.
  • In addition, discharge of residual debt can be granted after three years of the assignment period have elapsed if the procedural costs have been satisfied in full and the insolvency claims have been satisfied to 35%.
  • There is also the option of granting a discharge of the remaining debt after five years, once the procedural costs have been paid.

Effect of discharge of residual debt

The effect of the discharge of residual debt is regulated in § 301 InsO. Above all, it is important that the exemption applies to all insolvency creditors (i.e. creditors whose claim was already in place at the time the insolvency proceedings were opened), i.e. regardless of their participation in the insolvency proceedings.

If the residual debt is granted, the claims against the debtor do not expire; the designation as discharge of residual debt is therefore misleading. The debtor can, however, refuse performance to the insolvency creditors. The claims thus become so-called imperfect liabilities ( bonds in kind ) which, although voluntarily fulfilled, cannot be enforced. This has the following consequences, among others:

  • Payments made by the debtor to the obligee cannot be reclaimed (see Section 301 (3) InsO). This also applies if a third party (e.g. employer or pension provider) has paid. The debtor then only has a claim for damages against the third party ( third party debtor ).
  • Third-party guarantees for the debtor remain in place: The secured claim still exists (but see also below: Legal persons). However, the surety can no longer demand compensation from the debtor.
  • The debt-free obligation can be re-established by agreement between the creditor and the debtor or by signing a constitutive acknowledgment of debt.
  • The highest court has not yet clarified whether a creditor may continue to offset his insolvency claims against new claims by the debtor after the discharge of residual debt has been granted (for example, reimbursement according to SGB ​​II with simultaneous receipt of services according to SGB II, offsetting of the tax office against tax refund claims for periods after the granting of the residual debt discharge). Conversely, a decision of the Federal Fiscal Court of 7 January 2010 could result in the fact that, as soon as the debtor is released from the obligee's insolvency claim by Section 301 InsO, the possibility of offsetting will no longer apply. The tax office can also set off a reimbursement claim against an insolvency claim if the remaining debt has been released after the insolvency proceedings have been concluded. The tax court has followed the rulings of the BGH on the comparable case structure of offsetting following an insolvency plan. Offsetting - according to the tax court further - is not excluded by the prohibition of offsetting in Section 96 (1) No. 1 InsO, since in the case decided here, the claim for reimbursement from sales tax was already justified under insolvency law before the opening of insolvency proceedings, even if it was not so was fixed at a later date. According to the Schleswig-Holstein FG, the reimbursement claim could therefore already be fulfilled before it was determined.
  • Negative Schufa entries that existed before the bankruptcy are provided with a completion note (from the legal force of the residual debt discharge) and are only deleted after three years. There is also an entry of the resolution on the granting or refusal of discharge of residual debt. This entry will also only be deleted after three years.
  • If the debtor who is discharged from the remaining debt dies, who z. B. has acquired a new property before his death - after the discharge of residual debt has been granted - his heirs can of course not be claimed for his old debts. The point of the discharge of residual debt lies precisely in the possibility of being able to start over. The same must apply to private law contracts with credit institutions, which combine these with a statement such as “We will not proceed against the debtor”. This formulation means an unlimited waiver of claims (unlimited pactum de non petendo ) against the debtor and thus possibly his heirs.

Creditors whose claims only arise after the opening of insolvency proceedings (new creditors) are not affected by the discharge of residual debt. The debtor is not only left with new liabilities consciously entered into during the conduct of business phase, such as bank and mail order debts, but also maintenance arrears and tax arrears that have arisen during this time.

Exceptions for certain requirements

Certain claims are excluded from the discharge of residual debt in accordance with Section 302 InsO. This applies above all to claims for deliberate offenses ( Sections 823 ff. BGB), such as compensation for bodily harm, but also fraud, etc., as well as fines and fines. The claims must be registered with reference to the corresponding legal reason and the facts. In practice, this is often forgotten, with the result that the residual debt is also granted in this respect. The debtor can, however, object to the determination of the claim at the examination date . According to Section 178 (1) sentence 2 InsO, an objection by the debtor in the examination date does not conflict with the determination of the table. However, the obligee will then be deprived of the possibility basically granted to him by § 201 InsO to enforce the excerpt from the table after the end of the insolvency proceedings. In such a case, the obligee should already sue the debtor in the insolvency proceedings to establish the claim (as a tortious claim). This possibility is also granted to him by § 184 InsO. However, the creditor should note that Section 182 InsO does not apply. The value in dispute and thus the legal costs are therefore based on the nominal value of the claim, not on the prospect of a quota. A declaratory action will therefore not make economic sense if no satisfaction is to be expected after the end of the insolvency proceedings.

Refusal of discharge of residual debt

According to § 290 InsO, the remaining debt is to be refused if this has been requested by an insolvency creditor in the final date and if

  1. the debtor has been convicted of a criminal offense under Sections 283 - 283c StGB,
  2. the debtor has intentionally or grossly negligently provided incorrect or incomplete information in writing about his economic circumstances in the last three years before the application for the opening of insolvency proceedings or after this application in order to obtain a loan, to obtain benefits from public funds or to receive benefits from public funds Avoid cash registers
  3. In the last ten years before the application for the opening of insolvency proceedings or after this application, the debtor has been granted residual debt discharge or has been denied according to § 296 or § 297 InsO, (this only applies to proceedings with applications received before July 1, 2014)
  4. the debtor, in the last year before the application for the opening of insolvency proceedings or after this application, deliberately or grossly negligently impaired the satisfaction of the insolvency creditors by establishing inadequate liabilities or wasting assets or delaying the opening of the insolvency proceedings with no prospect of an improvement in his economic situation Has,
  5. the debtor intentionally or grossly negligently violated his obligations to provide information or to cooperate under this Act during the insolvency proceedings, or
  6. the debtor has deliberately or grossly negligently provided incorrect or incomplete information in the lists of his assets and income, his creditors and the claims directed against him, to be submitted in accordance with Section 305 (1) No. 3 InsO.
  7. the debtor violates his employment obligations according to § 278b InsO and thereby impairs the satisfaction of the bankruptcy creditors; this does not apply if the debtor is not at fault; Section 296 (2) sentences 2 and 3 InsO apply accordingly

Reasons for refusal according to § 290 InsO can only be asserted in the final date or until the decision according to § 211 Para. 1 InsO; they are meaningless for the subsequent debt discharge procedure.

Another reason for refusal is the non-payment of the trustee fee according to § 298 InsO. If the annually collected credit is not sufficient to cover the minimum remuneration according to § 14 para. 3 InsVV, the debtor is obliged to pay the difference from his non-attachable assets. If the costs of the procedure for the procedural section of the residual debt discharge procedure have not been expressly deferred, the trustee will request the debtor to pay the remuneration by setting a deadline of at least two weeks and threatening to refuse payment in the event of non-payment. If the debtor does not comply with this request, the trustee can request that the discharge of the remaining debt be refused.

Since the odds prospects are usually extremely poor, creditors seldom bother about the further procedure and do not submit requests for refusal. Insolvency administrators / trustees may inform creditors of reasons for refusal. They may also view the reports of the administrator / trustee and base the applications on them. In this way, some demands could be met with far greater satisfaction .

Towards the end of the six-year term of the declaration of assignment, those involved in the proceedings are to be heard again in accordance with Section 300 InsO on the debtor's application for discharge of residual debt. The date set by the court for this purpose, which can also be held in writing, represents a last chance for creditors to file a request for refusal. If no applications are made, the court will discharge the remaining debt.

Even after the decision on the granting of the discharge of residual debt has become final, the debtor may have to answer for grossly dishonest behavior during the period of good conduct. The bankruptcy court has to revoke the granting of the remaining debt at the request of an insolvency creditor if it subsequently turns out that the debtor has deliberately violated one of his obligations and thereby significantly impaired the satisfaction of the insolvency creditors ( Section 303 (1) InsO). The request of the obligee is only admissible if it is made within one year after the decision on the granting of residual debt has become final. At the same time, it must be credibly demonstrated that the stated conditions for revocation are met and that the applicant creditor was not aware of them until the debt relief became final ( Section 303 (2) InsO). The decision on the revocation is made after hearing the debtor and the trustee.

Sweden

The debt relief was introduced in Sweden in 2006. In the past, people with large debts had to pay on it for the rest of their lives. This had the effect that these people often did not want to work or migrated abroad.

The Swedish Debt Relief Act states that a person who cannot possibly pay their debts can get a plan. The person has to pay as much as possible over a five-year period and is then released from the remaining debt.

England

The bankruptcy procedure in England is structured fundamentally differently and offers debtors from Germany, among others, the opportunity to completely discharge their debts within 18 months.

Austria

With the introduction of personal bankruptcy in Austria in 1995, the discharge of residual debts and thus the extinction of the remaining debts after the successful completion of the “debt settlement procedure” was also enshrined in law. Personal bankruptcy gives honest and motivated debtors the realistic chance of a new economic start. The prerequisites include actual inability to pay and the obligation not to incur any new debt. During the repayment period, only a “modest but humane” lifestyle should be possible. In return, the executions and the interest rate stop. The debtors are again free of debt if the agreed payments and legal criteria are met. Creditors get part of their claims back.

Individual evidence

  1. ↑ Hans-Ulrich Heyer: Debt discharge and consumer bankruptcy in practice . Handbook for advisors and creditors. Walhalla Fachverlag, 3rd edition, Regensburg 2016, since 31
  2. ^ BGH , decision of September 21, 2006, Az. IX ZB 24/06, full text .
  3. ↑ OLG Oldenburg , judgment of November 5, 2013, Az. 12 U 94/13, Leitsatz = ZInsO 2014, 671-673
  4. ↑ BFH, decision of January 7, 2010, Az.VII B 118/09, full text .
  5. ^ FG Schleswig-Holstein, judgment of October 23, 2013, Az. 4 K 186/11, full text
  6. ↑ Revision at the BFH under Az. VII R 19/14 pending
  7. ↑ Hamburg Commentary on Insolvency Law, Herchen, § 184 Rn. 15th
  8. ↑ Alina Fichtner: Personal Insolvency - Cut Off And Drink Tea ( Memento of the original from August 14, 2009 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. , Süddeutsche Zeitung May 17, 2010 @1@ 2Template: Webachiv / IABot / www.sueddeutsche.de