Private bankruptcy proceedings for insolvency

The personal bankruptcy is often the only way for over-indebted individuals to stand on their own feet economically again. The process takes up to 6 years and ends with the remaining debts.

The personal bankruptcy is a simple procedure in the case of insolvency to manage the insolvency of individuals. The process should equally satisfy financially (according to their share of the claim), the creditors of an insolvent debtor. The consumer insolvency procedure was introduced on 01.01.1999 with the Insolvency Act. Reason for the introduction was the growing indebtedness of economically salaried individuals. 2009, there were already more than 100,000 personal bankruptcies in Germany. When the process is successfully completed, the debtor is released from its not extinguished during the process remaining debt. These so-called residual debts take place six years after the competent insolvency court has ordered the opening of insolvency proceedings. Adhering companies or shareholders with their personal assets, the rule insolvency is the more appropriate way to become economically free.

The personal bankruptcy is the appropriate procedure for over-indebted individuals not engaged in self-employment. Permitted to carry out the process are also former self-employed persons who have more than 20 creditors and no debt to employees. Indebtedness exists if the debtor's assets and enforceable his sizable income the next six years (taking into account of certain acceptability limits) the debt cannot be repaid. Between 1999 and 2003 the number rose to private insolvency proceedings tenfold (from just under 3,300 to over 22,500 procedures). Reasons were the possibility of residual debt, which did not exist before 1999, and the possibility of deferred payment of the costs of the bankruptcy procedure, which also completely destitute debtor may seek to personal bankruptcy. The Federal Statistical Office gave a total of 101,102 consumer insolvencies in 2009. The average amount owed was about 60,000 EUR per owner.

The personal bankruptcy has four stages: In the framework of extrajudicial settlement attempt the debtor initially asks his creditors for an actual demand formation. From the statements of all creditors a debt settlement plan is drawn up and submitted to creditors for approval. Based at least one creditor from the plan fails this. The debtor then receives by a recognized body (debt, lawyer, notary, accountant) a certificate of the failure of the plan and submits it to the competent bankruptcy court. When judicial debt settlement proceedings the court directs to the debt settlement plan and a balance sheet of all creditors and asking for its permission. Votes min. 50 percent of the creditors, the creditors reject further can be replaced on request by an approval. These efforts fail, the simplified bankruptcy process begins. The debtor's assets will be pledged and the proceeds proportionately paid to creditors. Subsequently, a residual debt is carried out. The entire process lasts for 6 years. Maintains in this so-called good conduct time the debtor sizable income is also distributed (after deducting the costs of the procedure) proportionally to all creditors of this.