Personal bankruptcy

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The term personal bankruptcy (in Switzerland and Austria as personal bankruptcy called) is the colloquial name for the judicial debt settlement, when a natural person insolvent and no independent economic activity exercises or has exercised. In this case, consumer insolvency proceedings are carried out in Germany and debt settlement proceedings in Austria . The discharge of residual debts enables these persons to become debt - free after a good conduct phase.

Process and goals

During a conduct phase , the natural person should make all reasonable efforts to pay off the existing liabilities (i.e. debts). In the case of employees, for example, this means that they have to use their income, which goes beyond the seizure exemption limit, to repay debt during the conduct of business phase. The granting of the remaining debt discharge and thus the remission of the remaining debts usually takes place at the end of the conduct of business phase. In the event of a violation of the statutory rules, a new private insolvency procedure can only be run through after a considerable waiting period - completely new. The procedure thus requires honest behavior on the part of the debtor. There are usually no ways to circumvent these requirements - even with supposedly ingenious constructions, since such behavior runs counter to honesty. Ultimately, this means that the debtor has to submit to the requirements to repay his debts to a very large extent during the conduct phase. The duration of this good conduct phase is regulated differently in the individual states.

The insolvency proceedings in Germany

In Germany, the bankruptcy code was replaced by a new bankruptcy law in 1999. Since then there has been consumer insolvency proceedings with discharge of residual debt. In 2013, a further reform of the bankruptcy law was passed through the law to shorten the residual debt discharge procedure and to strengthen the rights of creditors . The so-called “2. Stage “of the insolvency law reform came into force on July 1, 2014. In addition to shortening the insolvency process, the reform grants both debtors and creditors relief.

The changes brought about by the 2013 reform

  • Possibility of shortening the insolvency procedure to 3 years or 5 years (instead of the standard period of 6 years)
  • Possibility of early debt relief through an insolvency plan
  • Better tenant protection - owners of cooperative shares are now protected against termination
  • Introduction of additional exceptions to the granting of the discharge of residual debt
  • Change of employment obligation and refusal in the event of non-compliance
  • Possibility of subsequent refusal to discharge the remaining debt
  • Inappropriate debt or waste of assets refusal extended to three years
  • Strengthening the rights of unsecured creditors
  • Refusal of discharge of residual debt by written application

However, because the reform has significantly increased the remuneration for insolvency proceedings in consumer insolvency matters, far more than 35% of the debt must be repaid to shorten the proceedings to 3 years. For example, with a debt amount of € 35,000.00, an amount of € 18,882.00 would be necessary for a reduction to 3 years. This corresponds to 53.95% of the debt. The insolvency administrator alone receives € 5,832.00.

When repaying the outstanding debts, the question also arises of where the funds for their payment may come from. An answer to this can be found in the preparatory documents for the government draft for the reform of insolvency law in 2014. Accordingly, the satisfaction of the creditors can take place through the obligatory assignment of the attachable income during the conduct of business period . Correspondingly, the government draft: "When calculating the minimum satisfaction rate [...] the amounts accrued to the creditors within the conduct of business period - in particular the remuneration assigned according to § 287 Paragraph 2 InsO - are to be taken into account." lie, use it to satisfy the creditors. In this regard, the government draft: “On the one hand, the minimum satisfaction rate should - as already stated - motivate the debtor to make some efforts and, if necessary, to make extra-mandatory benefits. The debtor can - for which he had no reason to do so - z. B. to forego parts of his non-attachable income or assets that are above the subsistence level, increase his attachable income by taking on a part-time job or take out a relative loan. ”In addition, the government draft assumes that the satisfaction of the creditors also through the realization of the present Property of the natural person can be carried out. The government draft reads: “On the other hand, the debtor can contribute to achieving the minimum satisfaction rate by filing the insolvency application earlier. When calculating the minimum satisfaction rate […], the result of the final distribution of the insolvency proceedings also depends on how early the debtor files for insolvency Means debtor assets. Based on the government draft, the debtor can continue to use "activated third-party funds" to satisfy the creditors. This includes benefits from related parties or loans. According to the government draft: "This also applies to the case of a paid or unpaid direct payment from third-party funds activated by the debtor, since such a direct payment cannot be treated differently than if this money had first flowed into the bankruptcy estate and then used to repay the liabilities will. ”However, the government draft speaks of“ relative loans ”. With regard to other loans for repayment, ongoing case law should be observed.

One benefit for debtors created by the reform is the introduction of a consumer insolvency plan process . In contrast to the abbreviation, such an insolvency plan procedure for debtors is also applicable to procedures that were initiated before the reform came into force on July 1, 2014. An insolvency plan procedure enables debtors, in agreement with the creditors and the court, to work out an insolvency plan based on a settlement. It offers the possibility of overriding the rejecting creditors if the plan is accepted by a head and sum majority of the creditors present at the voting meeting.

Better tenant protection - owners of cooperative shares will be protected by the reform

Another change concerns tenant protection. Until the reform came into force on July 1, 2014, the insolvency administrator was able to terminate the debtor's tenancy based on the cooperative shares. A further change in the reform now also protects the cooperative shareholders in the context of personal bankruptcy - provided that the value of the participation does not exceed four net rents or € 2,000.

Additional exceptions to the granting of the discharge of residual debt

With the reform of personal insolvency, additional exceptions to the granting of residual debt relief were introduced. These exceptions represent receivables that the debtor must bear himself despite having gone through personal bankruptcy proceedings. Before July 1, 2014, the only rule was that claims from deliberately unlawful acts as well as fines and administrative fines etc. existed as exceptions to the discharge of residual debt. As a result of the reform, the following claims positions have now been expressly excluded from the discharge of residual debt: As a new exception, claims from arrears maintenance as long as the natural person as the debtor has withheld this maintenance in breach of duty or has not granted it at all. On the other hand, debts from tax evasion were added as a new exception, as long as the debtor has been convicted of a tax offense according to §§ 370, 373 or 374 AO .

Change of employment obligation and refusal in the event of non-compliance

The reform also made changes to the obligation to work. The obligation to acquire employment means that debtors are obliged to pursue an appropriate professional activity within the framework of insolvency proceedings or to always endeavor to do so. Also included in the obligation to work is the prohibition to refuse reasonable activities. In the event of non-compliance with the employment obligation or a breach of this, the discharge of residual debt is to be denied. Before the reform, the debtor could wait for the conduct of business period to begin until the obligation to work. Usually a year passed. As a result of the change accompanying the reform, the obligation to work must now be fulfilled from the opening of the procedure.

Possibility of subsequent refusal to discharge the remaining debt

Another change brought about by the reform is that the discharge of residual debt can also be refused retrospectively. Before the reform, the application had to be submitted in the deadline before the start of the conduct of business period. After the reform, creditors can submit a corresponding application for refusal within six months of the reason for refusal becoming known, even during the conduct of business period.

When the reform came into force, the period for filing an application was extended from one to three years due to the refusal of the reason for the establishment of inadequate liabilities or the waste of assets.

Strengthening the rights of unsecured creditors

Until the reform of private insolvency came into force, creditors were given preferential treatment who had the attachable portion of the debtor's income assigned to them in order to secure their claims in the time before the proceedings were opened. The result was that the wage assignment remained in place for the first two years even in the insolvency proceedings, so that the creditor of the assignment received the attachable part of the income alone for two years. As a result of the reform, this regulation was deleted without replacement. With this, the aim of equal treatment of creditors and fair distribution in insolvency proceedings was pursued. The previous wage assignment claim now automatically falls into the bankruptcy estate.

Written application for refusal of discharge of residual debt

Thanks to the reform, creditors can submit a written application for refusal to discharge their remaining debt before the deadline. Until the reform came into force on July 1, 2014, creditors were required to submit the application for refusal in person at the final date or to have it made by a representative.

Possibility of deferral of procedural costs

In German insolvency law there is the consumer insolvency procedure in the special form of the so-called deferral procedure. This is a consumer bankruptcy in which the state initially pays for all procedural costs. The debtor only has to pay the procedural costs after the residual debt has been granted. This procedure also enables completely destitute people to carry out consumer insolvency proceedings, because before the introduction of the procedural cost deferral, a natural person had to pay the procedural costs with the insolvency application as an advance. The possibility of deferral of procedural costs has increased the number of successful consumer bankruptcies (successful in the sense of granting a discharge of residual debt) considerably.

UK bankruptcy

The UK does not have a uniform length of time in bankruptcy proceedings. With at least nine months, personal bankruptcy in England and Wales does not take as long as in Germany, even if there are options for shortening proceedings that were filed after June 30, 2014. The shortening of the procedure in England and Wales, however, is accompanied by additional requirements, so that a natural person cannot participate in normal economic life for several years after a procedure there has been concluded . The consumer insolvency procedure in England cannot therefore be compared with the German procedure.

Debt settlement procedure in Austria

In Austria the bankruptcy of a private person is called the debt settlement procedure. Such a procedure is structured in four stages:

  1. Out of court settlement
  2. Restructuring plan (introduced as part of the insolvency regulation "new" since July 1, 2010 instead of the "compulsory settlement")
  3. Payment schedule
  4. Skimming procedure

Personal bankruptcy in Switzerland

In Switzerland , a private person can apply for bankruptcy under Article 191 DEBA (declaration of bankruptcy). The bankruptcy judge will open bankruptcy against an advance payment if there is no prospect of an amicable private debt settlement. However, a declaration of bankruptcy cannot only be submitted by a private person; Rather, each debtor is entitled to do so - provided the other requirements are met.

When bankruptcy is opened, the seizures already carried out (including wage seizures ) are no longer applicable. The creditors will receive for the unpaid claims a loss certificate . The debtor can only be operated again if he has gained new wealth or has wealth-building income. Personal bankruptcy allows separate agreements with each creditor to buy back the certificate of loss.

However, private bankruptcy does not provide any mechanisms, as is the case in Germany or Austria. Thus, the responsibility for successful debt relief rests solely with the debtor.

A limitation period according to Art. 149a Paragraph 1 SchKG applies to existing certificates of loss and this is 20 years. The statute of limitations for loss certificates was introduced with the revision of the SchKG in 1997. This is a real limitation period. As a result, a new twenty-year period begins to run with every interruption (for example, with a renewed collection or with a partial payment by the person being operated) and that the objection of the statute of limitations in the dispute over a claim for loss certificates must be expressly raised.

See also

Individual evidence

  1. Federal Law Gazette I 2013 . July 18, 2013, p. 2379 .
  2. Bundesrat (Ed.): Draft of a law to shorten the residual debt discharge procedure and to strengthen the rights of creditors . Printed matter 467/12 edition. August 10, 2012.
  3. Tax Code (AO) of the Federal Ministry of Justice and Consumer Protection. Retrieved September 28, 2016 .
  4. § 300 InsO. Retrieved May 10, 2016 .
  5. Hunziker / Pellascio, 207; especially corporations (Hunziker / Pellascio, 210)
  6. Hunziker / Pellascio, p. 207