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Filing for bankruptcy is arguably one of the toughest decisions some people face in life. The entire process of the insolvency procedure takes several years, in which one lives for a certain length of time in a very limited framework. Nevertheless, the debtor gets a real second chance after the end of the personal bankruptcy proceedings through the discharge of residual debt and can start a debt-free life after the bankruptcy Future without debt nothing stands in the way.
What is the process before filing for personal bankruptcy?
Before you can actually apply for personal bankruptcy to combat debt, two steps are always taken beforehand in order to find an agreement with the creditor in advance.
Attempt to reach an out-of-court settlement
Before you can file for personal bankruptcy, the debtor must try to find an out-of-court settlement with the creditors with the help of a competent advisor. For this purpose, all documents, such as assets or outstanding debts such as credit agreements, of the consumer concerned must be disclosed. A debt repayment plan is then presented to the creditors. If the out-of-court settlement with the obligee fails, the judicial procedure for personal bankruptcy can be applied for at the local court.
Turning on the local court before the personal bankruptcy proceedings
The district court will first try again to enforce the debt plan that has already been drawn up with the creditors, provided there is a realistic prospect of an out-of-court settlement. At least half of the creditors must agree to the debt reduction plan. If the agreement fails again, ultimately only the application for personal bankruptcy and thus legal proceedings will help.
How exactly can you apply for the personal bankruptcy procedure?
Under the condition that no possibility is found to reach an out-of-court agreement with the creditor to settle the debt, the only option left for the debtor is to apply for insolvency proceedings - also known as private insolvency proceedings.
Filing for personal bankruptcy in court
In the application for personal bankruptcy, which must be submitted to the competent local court, all economic and personal circumstances must be disclosed, such as evidence of income. In addition, a debt counselor or lawyer must be named who can prove that the out-of-court debt settlement has failed. The bankruptcy court appoints an insolvency advisor who acts as a trustee and manages the entire assets. In addition, the debtor must submit a declaration of assignment, in which he accepts that the income may be used to repay the debt during the private bankruptcy. The debtor is provided with a trustee, who is assigned the role of insolvency administrator for a standard bankruptcy. The trustee is obliged to immediately report all changes in the income situation, but also, for example, in the event of a change of residence. The trustee has great influence in bankruptcy proceedings and can, for example, decide whether to own a vehicle or multimedia device.
When does personal bankruptcy begin and how long does it last?
After the appointed trustee has divided the entire assets minus the entire procedural costs among the creditors, the so-called “good conduct phase” begins. During this time, the debtor must demonstrably fulfill various obligations:
- Looking for or pursuing a job
- Evidence of assets and income
- Proof of change of residence
- Submission of inheritances (if any)
- Payments to the liquidator
If the debtor carefully fulfills all obligations within a period of three years, the conduct phase ends and the debtor can apply for discharge of the remaining debt. In the three following years, the Schufa entry will also be deleted as part of the residual debt discharge. Overall, you have to expect at least 6 years in private bankruptcy in order to be completely exempt from any outstanding claims and debt-free.
Helpful tips for the bankruptcy process
The time in personal bankruptcy is very difficult as you have to meet many obligations and adhere to exact regulations. For a smooth process and ultimately a discharge of residual debt, debtors should properly store all documents, records and certificates that have to do with the insolvency proceedings in any way so as not to endanger the course of the procedure and ultimately the discharge of residual debt. In this way, the debtor and, of course, the insolvency administrator can always keep an overview and nothing stands in the way of a residual debt discharge.
Out-of-court settlement offers an alternative to personal bankruptcy proceedings. This means that you agree with the creditor on a remaining amount to be paid by you. In this case there is no formal bankruptcy procedure.
Find out if a bankruptcy plan is an option for you. This is a kind of debt settlement under judicial supervision. You can offer this to the creditors and agree on a court appointment.
It is also important here: completely stop your payments. Except for essential costs, such as rent or electricity, you shouldn't incur any debt in order to get out of bankruptcy as quickly as possible.
Before filing for bankruptcy proceedings, the debtor should open a so-called attachment protection account. The P-Account is a credit-based account without Schufa, which protects an amount of € 1,178.59 to secure your livelihood in the event of seizures. As an expert for P-accounts, Pay Here supports you in securing your monthly allowance and offers you the best service around the topic of seizure protection. Open a P-Account in a few minutes and secure your tax exemption!