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The insolvency procedure: definition, procedure, duration, etc.

The consumer insolvency proceedings as well as the regular bankruptcy proceedings are used to ensure the To satisfy creditors according to their shares in the debt of the debtor.

At the same time, however it also protects the debtor before other enforcement measures that the creditors could otherwise seek against him.

However, private bankruptcy proceedings are available private individuals only open, while for the self-employed and companies the bankruptcy procedure is usually only by way of the Standard bankruptcy can be trodden. How does such a bankruptcy procedure work under bankruptcy law?

In the best case scenario, the conclusion in bankruptcy proceedings is the Debt discharge. For this, however, the debtor has to adhere to a few conditions, because the ongoing insolvency proceedings certainly hold up Restrictions on the debtor ready. What does the bankruptcy procedure mean for the debtor?

FAQ: Bankruptcy Proceedings

What is bankruptcy?

The bankruptcy process is a judicial process. It is used to reduce debt in a regulated manner if the debtor is insolvent or over-indebted. In this procedure, the claims of all creditors are to be paid off equally. You can read a more detailed explanation here.

What types of bankruptcy proceedings are there?

Standard bankruptcy is intended for companies and the self-employed. Consumers, on the other hand, can file for personal bankruptcy. And then there is inheritance bankruptcy in case a deceased has left (almost) nothing but debt.

What happens if all debts are not paid off during personal bankruptcy?

In this case, a consumer can apply for the discharge of residual debt together with the application for personal bankruptcy. If the bankruptcy court grants this exemption at the end of the proceedings, it will be released from all outstanding debts. The creditors cannot then demand that these be paid.

Danger! A legislative process is currently underway to implement an EU directive in German law. Then the Remaining debt discharge in the context of an insolvency already after 3 years respectively. This new regulation presumably applies to debtors who file for bankruptcy after October 1st, 2020. We have further information on the planned change in the law in our guide to Personal bankruptcy summarized.

What is bankruptcy?

Both that exist in Germany Personal bankruptcy proceedings as well as the Standard bankruptcy. The former is a simplified procedure and is available natural persons only available, while the latter for legal persons (e.g. company) is intended.

Indebted Self-employed can only carry out personal bankruptcy if they have fewer than 20 creditors and no debts from employment relationships.

Legally, the bankruptcy procedure is in the Bankruptcy Code (InsO) regulated. While legal persons are obliged to file for bankruptcy in the event of insolvency, private individuals are not subject to any such compulsion.

However, bankruptcy is often called Relief felt. Because next to the prospect of one debt-free restart enjoy debtors during bankruptcy proceedings Garnishment protection: The creditor can no longer enforce against the debtor.

The process of regular bankruptcy

In order to Managing director, board member or personally liable partner To be able to apply for insolvency proceedings for a GmbH, for example, one is required Reason for bankruptcy:

  1. Insolvency
  2. impending insolvency
  3. Over-indebtedness

Preliminary insolvency proceedings begin with the submission of the insolvency application. In this phase, the court checks whether the prerequisites for opening are met, for example the existence of a reason for bankruptcy. In addition, a sufficiently large bankruptcy estate exist so that at least the procedural costs can be covered or deferred.

During the bankruptcy proceedings, the court can already first security measures order, for example the appointment of an insolvency administrator and the prohibition of enforcement measures.

The term "Bankruptcy proceedings“Is out of date, because before the introduction of the bankruptcy code, the bankruptcy code dealt with regular bankruptcy.

Determination of claims and distribution of assets

Once the bankruptcy proceedings are opened, the court asks the creditors to submit their respective To register a claim. In insolvency proceedings, only those claims are taken into account that are listed in the Claims and insolvency table Pop up.

Distribution of assets and repeal of bankruptcy proceedings

Then the Debtor's Assets distributed proportionally to the creditors by the insolvency administrator. If the assets are not sufficient to settle the claims in full, the creditors can get one enforceable extract from the bankruptcy table can be issued in order to use the measures of the Foreclosure based on the remaining claim to operate.

Because as a rule insolvency only exists under certain conditions the possibility of a Debt discharge to get. In addition, this debt relief only applies to natural persons.

Once the realization of the assets has been completed, the insolvency proceedings can be lifted, i.e. ended.

Process of personal bankruptcy

This is a prerequisite for the insolvency proceedings for consumers Failure of an out-of-court settlement attempt with the creditors. Only if this attempt to settle the debt was unsuccessful and a corresponding certificate according to § 305 InsO is available, the debtor can apply for the opening. The insolvency proceedings are therefore usually preceded by one Debt counseling ahead.

Even in the course of personal bankruptcy, the Notifying the creditors and started raising their demands. During the judicial part of the personal bankruptcy, the insolvency administrator seizes the attachable portion of the debtor's property. After deducting the procedural costs and the administrator's fee, the remainder is paid out proportionally to the creditors.

Conduct phase and discharge of residual debt

In contrast to regular bankruptcy, the Termination of judicial insolvency proceedings the personal bankruptcy has not yet ended. It follows the Conduct phase, in which the debtor has various obligations, for example

  • the Employment obligation: The debtor must do everything possible to find a job.
  • the Obligation to provide information: Any change in financial circumstances, the termination of the job, a move, etc. must be reported to the insolvency administrator.
  • Duty to assign income: The debtor has to surrender the attachable portion of his net income to the insolvency administrator.
The official level regulates the amount of the income assignment Garnishment table.

Only if the debtor fulfills his obligations throughout the entire insolvency process, he can Debt discharge by the court get granted. All claims from creditors who already existed before bankruptcy was opened can be canceled after the remaining debt has been discharged no longer asserted become.

Duration of personal bankruptcy

After filing for bankruptcy, the actual judicial proceedings about a year. Along with the following conduct of business phase, debtors must focus on a Duration of six years to adjust.

Shortening personal bankruptcy

However, private individuals can also shorten the bankruptcy process. However, this requires the following requirements:

  • Reduced to five years: Payment of the entire procedural costs
  • Reduced to three years: Payment of the entire procedural costs as well as at least 35 percent of the outstanding claims

Usually, however, debtors have to rely on one six-year term because the shortening to five or even three years is extremely rarely possible.

Costs in bankruptcy proceedings

Neither regular nor personal bankruptcy is free. Debtors shouldn't be put off by this, however, as bankruptcy is often that only way to a debt-free future.

However, a lump sum cannot be given, as the costs depend on the Number of creditors and the Bankruptcy estate are dependent. Debtors who are initially unable to pay the procedural costs should receive theirs Deferral apply directly in the course of the opening application. The following positions usually arise:

  1. Court costs
  2. Remuneration of the liquidator
  3. Legal fees

It is best to check with yours Debt counseling or your Lawyer according to the likely costs. They can seriously estimate the amount based on your individual case. Due to the possibility of deferral, insolvency can also be an option for Hartz 4 recipients.

What happens after the bankruptcy proceedings?

For private individuals, insolvency usually ends with the Debt discharge. SCHUFA entries are marked with a Completion note provided and completely deleted after three years. So that is Creditworthiness of the former debtor restored.

The Standard bankruptcy does not have to end with the discharge of the remaining debt. Creditors can often continue to enforce outstanding claims. Whether a company will continue to exist after the insolvency proceedings or will be dissolved therefore depends heavily on it from the specific individual case from.

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The insolvency procedure: definition, procedure, duration, etc.
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