You can apply for bankruptcy on IRS debt

Personal bankruptcy - what to do against the mountain of debt?

Rents are rising, electricity is becoming more expensive, and the Corona crisis is pushing people everywhere in Germany to the brink of livelihood. Should the Debt burden too high can be one Personal bankruptcy represent a way out. In 2019 there were more than 60,800 insolvency proceedings opened in Germany. But what does it mean? How does a personal bankruptcy procedure work?

What is personal bankruptcy?

The personal bankruptcy is a simplified bankruptcy proceedings in court. Debtors who otherwise cannot find a way out of their arrears can do so with theirs Erase debt. Even if they couldn't settle it in full. During the proceedings, debtors are protected from enforcement by creditors. For example, personal bankruptcy can be a way out if the debtor can no longer pay the rent or bills and an out-of-court settlement with creditors doesn't work. Personal bankruptcy becomes official Consumer bankruptcy called. For personal bankruptcy, however, there are formal hurdles that the debtor must overcome.

Requirements for personal bankruptcy

You can only file for personal bankruptcy if you no independent economic activity have exercised. This option is only available to self-employed persons if there are no claims against them from employment relationships. Also need theirs Financial circumstances manageable be. This is the case if the self-employed person has fewer than 20 creditors when submitting the application. If you receive unemployment benefits or a pension, you can still apply for personal bankruptcy.

Process and duration of a personal bankruptcy

As a rule, personal bankruptcy lasts for six years. However, it is possible to use the procedure to be shortened to three years. However, he must do so within these three years Reimburse 35 percent of the total debt and the procedural costs. If the debtor is able to pay the costs of the proceedings within five years, the period of personal bankruptcy is shortened to these five years.

A personal bankruptcy runs in six stages, but not every debtor has to go through them in the same way. Because if it is possible to find an out-of-court solution with the help of a debt counselor, the remaining steps are superfluous.

First step: In the out-of-court debt settlement procedure, the debtor tries through a lawyer or debt counseling office, a Agreement with the creditors bring about. Here is also a Debt settlement plan. To do this, the total amount of the arrears payments must be determined.

Second step: If the out-of-court settlement fails, that begins judicial debt settlement procedures. The debtor provides the Bankruptcy petition and must submit the debt settlement plan. Proof of why no out-of-court settlement was possible must also be provided.

Third step: The Insolvency plan proceedings. Here it may be that something has changed in the debtor's financial situation or that the creditors signal that they are ready to negotiate. A renewed attempt at agreement takes place.

Fourth step: This is where it happens judicial bankruptcy proceedingsunless there is a debt settlement plan. The court examines whether the procedural costs are covered or whether a request for deferral is granted.

Fifth step: The Conduct phase begins after the court dies Debt discharge announced. Here the debtor has to transfer the attachable part of his income to a trustee. The reductions can also occur here (to three or five years), provided the debtor manages to reach the applicable limits.

Sixth step: As soon as the conduct of business phase has expired, the court will decide on the discharge of the remaining debt. For this, the debtor must have complied with his obligations. This move means that the creditors have theirs No longer enforce claims against the debtor can.

What does a personal bankruptcy cost?

During a personal bankruptcy, costs arise from various sources. On the one hand, you have to pay the trustee as a debtor, on the other hand the Court costs and possibly also the switched on Lawyer or debt counselor reward. The court and trustee fees result from the bankruptcy estate. These costs can be deferred or paid off in installments. The costs are accordingly always different depending on the individual case. You can get one from the district court Eligibility certificate for advisory assistance procure. This means that the state pays the legal fees. However, there are also certain hurdles for this.

Disadvantages and consequences of personal bankruptcy

One disadvantage is clear: Personal bankruptcy proceedings take several years. You must continue to have your Adjust consumer behavior. And because of the Schufa entry it can be difficult to find a new apartment should you be looking for one. Switching between electricity, gas or telephone providers is just as difficult. Your employer also knows: you have to talk to the bossso that the payroll department can transfer the seizure-free portion to the trustee. And finally, there are costs for both the court and the trustee.

Conditions for personal bankruptcy

During personal bankruptcy, the debtor has to comply with certain obligations. Should he violate this, the court can refuse to discharge the remaining debt. The reason for this is that the procedure is to ensure that you dA debt-free restart through orderly debt reduction to enable. The obligations also protect the interests of the creditors. The most important edition is the Employment obligation. This means that you must have a decent job during the bankruptcy process. You must not turn down reasonable jobs, you should be unemployed beforehand. Furthermore, you have to search for jobs independently and submit applications on a regular basis. This is to ensure that you can pay your debts in the long term.

In addition to the obligation to work, you must also have the comply with the following requirements:

  • You are not allowed to make payments to individual bankruptcy creditors.
  • Any service may only be given to the insolvency administrator or the trustee.
  • Should you inherit in the course of the conduct of business phase, half of the inheritance must be paid out to the insolvency administrator.
  • If you change your place of residence or work, you must report this to the administrator and the bankruptcy court.

additional Information

Further information on personal bankruptcy can be found, for example, at the social welfare office. There are also specialized lawyers and debt counselors throughout Germany who can provide help depending on the individual case. At the Federal Employment Agency you can find out everything about insolvency money.

Cover picture: © JackF /