Bankruptcy of consumers is a real chance to get out of debt. An insolvency proceeding may be used by the consumer if he or she is an insolvent person and the insolvency is not a result of deliberate action or gross negligence. After easing the conditions to be declared bankrupt, the interest in this solution has grown exponentially. In 2016, 4288 bankruptcies were declared, which is 85 per cent. more than a year ago. This year’s statistics (1311 bankruptcies announced in the first quarter) let us suppose that we will have another record.
How to go through the procedures of consumer bankruptcy? Here is a short guide from the Federation of Financial Advisors (ZFDF).
First and foremost, it is worth pointing out that consumer bankruptcy, ie de facto reduction or remission of debts, is not a solution for financial cops. The court is of the opinion that the consumer must declare bankruptcy only if the insolvency is the result of accidental acts and not the result of deliberate actions such as taking out loans that are known to be unpaid.
Often consumer bankruptcy is the only way to go straight and get rid of the paralyzing fear of seizing assets by creditors. As the bankruptcy in San Diego is stopped, the debt collector is no longer entitled to harass the debtor and the bailiff must suspend his proceedings. In turn the validity of the order implies the cancellation of all enforcement proceedings.
The entire bankruptcy process runs in three main stages, which include: the recognition of the application (the procedure for declaring bankruptcy of consumers), the proper bankruptcy proceedings and execution of the creditors’ repayment plan. However, what this process really looks like depends largely on the individual situation of the debtor.
Step 1: Prepare Your Bankruptcy Application
The first step to declare bankruptcy is to file a claim for bankruptcy in the consumer department of the district court. The form should include a justification, ie a description of the situation that led us to such a step. When completing the documents, we will also have to list all the assets of the property, the funds collected, and a detailed list of all receivables and a list of creditors.
Step 2: Inventory Of Property, ie, Proper Bankruptcy Proceedings
If our application is successful, the court will appoint a trustee who will supervise the execution of the bankruptcy plan, ie our property, between the creditors.
Importantly, it does not include all our goods, but only those that have real market value and can be sold at a profit. Bankruptcy also includes our remuneration, but that does not mean we will be deprived of the means to live. The provisions of the labor law clearly state what part of the payment is free of attachment. This amount is equal to the minimum wage, ie currently close to 1 500 zł net. Moreover, if a part of our assets is necessary for our income, eg when we are taxi driver and the car we need at work, it can stay in our hands.
One of the biggest fears of bankruptcy decisions can be the fear of being arrested.
Step 3: Set Up A Repayment Plan For Your Creditors
Despite the liquidation of assets, it may turn out that not all creditors’ claims have been met. In this case, the court establishes a debt repayment plan that can not last more than 3 years. It also depends on how much of our monthly income will be spent on covering other receivables.
After the bankruptcy proceeding and the execution of the repayment plan and the court’s decision to write off debts unsettled in the course of the bankruptcy proceeding, we are no longer debtors of banks and other institutions where we have lent money.