Help with personal bankruptcy

The most important things at a glance:

What is personal bankruptcy?

Personal bankruptcy, also known as consumer bankruptcy, is a simplified procedure that enables private individuals to settle their debts. If the income generated is less than the liabilities and the resulting debt is settled in the foreseeable future, the last solution is often to file for private bankruptcy. In contrast to a general bankruptcy, consumer bankruptcy is often an endlessly slow and deprivation-rich process that is accompanied by many formalities.

Personal bankruptcy aims to discharge the debtor's remaining debts and the associated settlement of his creditor.After an application, it can take up to 5 weeks before the proceedings are opened.

Who do you turn to in the event of personal bankruptcy?

For reasons of cost and time, it is advisable as a debtor to seek professional advice and help. There are recognized debt counseling centers that can help. A distinction is made here between non-profit or state providers and private advice centers. Lawyers, notaries, tax consultants and auditors are also suitable as advisors. The debtor reveals his financial and income situation to the respective advisor.

A big advantage of the non-profit and state debt counseling is that there are no costs. Disadvantage: It takes a while to get an appointment. This can be dangerous if the creditors threaten with foreclosure measures or important deadlines expire during this time.

How do you apply for personal bankruptcy?

You can file an application for personal bankruptcy in the respective local court. For a successful application, the debtor must submit a variety of documents and forms to the court. It is important that you receive a certificate from a suitable body that an out-of-court settlement attempt has taken place and has failed.

After filing for bankruptcy, it can take up to approx. 5 weeks for proceedings to be opened

In our guide “ How do you file a personal bankruptcy with the court? “You can find more information on this.

How long does a personal bankruptcy extend?

The consumer insolvency proceedings take a total of 6 years, starting from the time the proceedings are opened. Insolvent or over-indebted persons can, under certain conditions and after submitting the application, request a shortening of this period. According to Section 300 (1) of the Insolvency Code, the following conditions apply to shorten the insolvency proceedings:

  • The remaining debt will be released upon request after three years if both the costs for the procedure and 35 percent of the outstanding amount have been paid during this period.
  • The bankruptcy ends after only five years when the debtor has at least paid off the costs of the proceedings.


It is important to note that there is no automatic termination of the insolvency proceedings. The debtors must submit an application to the competent court for abbreviation so that the remaining debt can be discharged. As soon as the bankruptcy court has checked all requirements to be met, the proceedings will be discontinued. If all debts and procedural costs have been paid by the debtor, he can apply for an early discharge of the remaining debt regardless of the period of 6 years.

A rather unknown way to shorten the duration of the insolvency proceedings is to submit an insolvency plan. The debtor is professionally accompanied by a lawyer. A consideration as to which amount satisfies the creditor and is higher than that in the regular insolvency proceedings is clarified here. The procedural costs must also be paid. The money that is paid to the creditors according to the insolvency plan must be provided by a third person - for example a relative or friend. If the creditors agree to the insolvency plan, the remaining debt can be discharged immediately. An insolvency plan can be submitted from the time of filing for bankruptcy as well as in the conduct of business phase.

What are the costs of bankruptcy?

Personal bankruptcy costs money. In the already difficult financial situation, this often represents an even bigger problem for those affected. In addition to the costs of the proceedings for the court, the debtor also has to pay for the remuneration of the insolvency administration. There are ways to request deferral of the procedural costs by means of an application. If the debtor applies for the deferral of the procedural costs - in this case often only after the remaining debt has been discharged - the payment is made in monthly installments.

From what amount does it make sense to file for bankruptcy?

Filing for bankruptcy only makes sense if the amount in debt exceeds EUR 2,500. If the sum is less than the above amount, filing for bankruptcy is not worthwhile, since the court and bankruptcy administration costs alone cost so much together.

Even if you have many creditors but only a small amount of debt, you should not take advantage of insolvency proceedings.

How much money are you entitled to in a personal bankruptcy?

During the period of insolvency proceedings, those affected should open a P-account, which secures the subsistence level. The account holder has a monthly basic allowance of € 1,178.59 (as of 2020). This tax exemption cannot be attached and allows everyday life to be contested. All incoming funds that are above the exemption are skimmed off and are due to the creditors.

For dependent persons or when receiving child benefit, the monthly allowance can be increased with appropriate certificates. You can find out more about this in our advisory article " P-Account: Calculate tax exemption "

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