Personal bankruptcy proceedings

Personal bankruptcy is a procedure in which a natural person (a consumer, but also a sole trader or self-employed professional) who is no longer able to pay their debts repays the creditors by realising their assets and, after the probation period expires, can obtain a discharge of the remaining debts. The aim of the procedure is for the debtor to get back on their feet and live free of debt.

Condition: insolvency
Personal bankruptcy is possible if the debtor is insolvent, i.e. if they are illiquid over a longer period (unable to pay their due obligations within a certain period) or if they become insolvent in the long term (the value of their assets is lower than the sum of their liabilities – over-indebtedness) (Article 14 of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, ZFPPIPP).

Illiquidity over a longer period is presumed in particular:

• for a consumer: if they are more than two months late in fulfilling obligations totalling more than three times their salary, compensation or other regular income; if they are unemployed and have no other regular income, if they are more than two months late with obligations exceeding EUR 1,000;
• for a sole trader or self-employed professional: among other things, if they are more than two months late with obligations exceeding 20% of the liabilities stated in their last annual report, or if the funds in their accounts are insufficient to execute an enforcement order and this situation lasts more than 60 days.

How the procedure begins
The debtor files a petition to initiate personal bankruptcy proceedings with the competent district court. The petition may also be filed orally on the record at the court (Article 383a of ZFPPIPP). The petition must be accompanied by a report on the state of the debtor’s assets: an inventory of all assets (a sole trader lists business assets separately), data on all bank accounts, salary, pension or other regular income, and a statement that all assets have been listed. The signature on the report must be certified, unless the report is given or the signature acknowledged at a hearing before the court (Article 384 of ZFPPIPP). A discharge of debts is applied for at the same time.

How we help you
Our company provides legal advice on the conditions for personal bankruptcy and discharge of debts, and assistance in preparing the petition to initiate proceedings, the report on the state of assets and the application for discharge of debts. Where representation before a court is necessary, we help you work with an attorney (odvetnik).