Personal bankruptcy: What now?

Personal bankruptcy causes a whole range of consequences for the bankrupt. Below is a brief overview.

The trustee contacts you for an appointment regarding personal bankruptcy

In the case of personal bankruptcy, it is essential that you are reachable by email or phone and that you bring all accounting documents and other important items to the appointment with the trustee.

During the appointment, the trustee will discuss the financial situation of you or your company with you. Your accounting, outstanding debts, any vehicles registered in your name or that of your company, your place of residence, assets, etc. will be discussed.

This first meeting is important. The trustee will get a clear picture of the circumstances that led to your personal bankruptcy and can determine the further course of the procedure.

No more post on your own address/registered office

Your mail will now be sent to the trustee’s office. This measure is taken because in the case of personal bankruptcy, documents regarding mutual insurance, social security, etc. are often still sent to the bankrupt. These documents are important for the trustee. By receiving the mail in his office, he won’t miss anything.

However, the trustee is legally obliged to forward private mail (such as personal letters) to you.

No longer have control over your own assets from the personal bankruptcy judgement

This means that you may no longer repay debts yourself and may no longer dispose of your goods and funds. The trustee can use all of your possessions to pay off debts by selling them.

Of course, the law imposes limitations on this to ensure that you can still live. Among other things, food, bed and bedding, clothing, washing machine and iron, necessary heating appliances, etc. do not fall under this. (A complete list can be found in Article 1408 of the Judicial Code.)

This provision also applied to wages in the old bankruptcy law (all bankruptcies declared before May 1, 2018).

This provision has been abolished in the new law (all bankruptcies declared after May 1, 2018). So you can fully dispose of your wages and income, and in consultation with the trustee, you can even decide to make a restart.

It is important to know that this does not concern goods that you have received after the declaration of bankruptcy and that do not have their cause in personal bankruptcy. For example, if you receive an inheritance during the bankruptcy procedure, you will be able to dispose of it freely.

Suspension of ongoing proceedings

Article XX 119 of the Economic Law Code (hereafter WER) states that all disputes concerning the estate (e.g. regarding unpaid invoices) that were ongoing at the time of the personal bankruptcy will be suspended until the date of the declaration of the claim. The receiver can then accept the claim, which would make the court procedure unnecessary, or choose to continue the discussion.

Suspension of all seizures for personal bankruptcy

Article XX 120 WER states that bailiffs will not be allowed to make any further seizures during the bankruptcy proceedings. They cannot enforce any more payments. However, if a date for the forced sale of a seized asset had already been set prior to the judgement, that asset can still be sold. The proceeds from the sale will go entirely towards the personal bankruptcy to aid in the settlement.

Termination of ongoing contracts

The receiver has the authority to terminate any contracts that the bankrupt had entered into, if necessary. This includes contracts such as rental agreements for housing, gas, internet, and water.

In the case of bankruptcy of a company with employees, the receiver will also ensure that the employees are aware of their situation. The employment contracts will be terminated as of the date of the personal bankruptcy judgement. The employees can then request their overdue wages from the fund for business closures.

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