Consumer bankruptcy: get out of debt

Debt expires after 30 years. Over indebted private individuals can shorten this almost infinitely long time. We present the procedure for consumer bankruptcy here. A critique at

Unemployment, divorce or a failure to become self-employed are often reasons for serious financial problems. Those who, according to human judgment, are no longer able to pay off their debts from existing income or assets, are considered over-indebted. Many of those affected have difficulty getting out of the red. Consumer bankruptcy is often the last resort.

The consumer bankruptcy procedure is intended for private individuals. Former self-employed can only avail themselves if they have fewer than 20 creditors. In addition, there may be no liabilities to former employees.


This is how consumer insolvency works

This is how consumer insolvency works

  • The debtor must first try to reach an out-of-court settlement with his creditors. He urges all creditors to name their demands. He then makes a suggestion for comparison, usefully with the help of debt counseling. If an agreement is reached, the procedure ends.
  • If the out-of-court settlement has not worked, the debtor must have this failure certified. He can then apply to the bankruptcy court for the debt settlement procedure. For this purpose, he submits, among other things, an overview of assets and a list of claims against him. The court is examining whether the debt settlement plan has any prospect of success. The debtor must pay for the procedure himself.
  • If all efforts have so far failed, the court opens consumer insolvency proceedings. A trustee realizes the existing attachable assets. This means that he seizes and sells or auctions the valuable property that is not vital for the debtor. Section 811 of the Code of Civil Procedure describes what may not be attached. The proceeds will initially be used to pay the costs of the proceedings. The rest goes to the creditors. If none of the creditors has a justified objection, the debt relief is announced and the final step follows.
  • The debtor must transfer the attachable income to a trustee for six years, starting from the day insolvency proceedings are opened. The latter distributes the money to the creditors after deducting the procedural costs. Within these six years, the so-called behavior behavior phase, the debtor must exercise a reasonable gainful employment or endeavor to do so. He also has a number of other duties. For example, he has to report every change of residence and job. In the case of an inheritance, he is also obliged to transfer half of the inherited assets. If everything goes well, the person concerned is debt-free after this time.


Faster debt free

Since 2014, debtors have been able to reduce the insolvency period to five years if they pay the procedural costs within this period. It is even faster if the debtor has paid at least 35 percent of his debts and the procedural costs. Then he is already debt free after three years.

Our recommendation: If you are unable to pay your bills on time for a long time, you should go to debt counseling. You can also contact us. Together we try to find a way out of debt.

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