2009 Strict rules for consumer’s bankruptcy

Beginning March 31 2009 insolvent clients of a bank are entitled to declare their bankruptcy, if they meet very strict regulations of the Act concerning consumer’s bankruptcy.

The Act introduces to the Bankruptcy and Reorganization Law bankruptcy proceedings for natural persons that do not conduct any business activity i.e. proceedings in so-called consumer’s bankruptcy.

Proceeding initiation

Proceeding shall be initiated by a debtor, however there is no obligation of filing a bankruptcy motion. Bankruptcy can be declared if the debtor became insolvent due to the exceptional circumstances and facts beyond one’s control. The bankruptcy cannot be announced if a person assumed the obligation already being insolvent or his/her work relationship ended for reasons attributable to the employee or with his/her consent. Bankruptcy can be declared once for 10 years.

Liquidation of a bankrupt’s assets

Liquidation of a bankrupt’s assets can be conducted by the bankrupt, however under receiver’s supervision and with the consent of the court. Debtor must pass all the assets to the receiver, including real-estates. From the money obtained through the sale of the house or apartment the debtor is entitled to obtain amount that equals an average lease rent for a period of twelve months.

Plan of repayment of debts

After the liquidation of bankruptcy estate and satisfying of creditors is over and there are still debts to be repaid, the court on the debtor’s motion can decide of the repayment of debts for the next five years. The amount of repayment shall depend on debtor’s remuneration, amount of a debt and possibilities of their repayment. On the creditor’s demand a court can determine repayment conditions more beneficial for a creditor. If there are circumstances that make the repayment impossible a court can prolong the period for repayment, however not more than for two years. In the event of sudden financial condition improvement of the bankrupt (gift, win in the lottery, inheritance), a court can increase the amount of debt repayment. However ,this is not possible if the improvement of financial condition is connected with professional or business activity . The aim of this solution is encouragement of debtors to increase their professional activity.

Creditors’ protection

Changes not only give new opportunities for the insolvent debtors but also introduce some regulations concerning debtors’ protection. Therefore during the repayment of the debt insolvent persons are not allowed to perform activities that are beyond regular management and are obliged to submit annual statements about implementing the debt repayment plan, revenues earned and increase of the assets. If the bankrupt fails to meet the above requirements and do not repay the debts – a court shall discontinue bankruptcy proceeding and the debtor shall be a subject to general conditions for repayments of debts.

Low proceeding costs

Costs for initiation bankruptcy proceeding for a consumer amounts only to 200 zł, in comparison to 1000 zł that is currently collected from the entrepreneurs.

Kancelaria Prawna 90-060 Łódź, ul. Nawrot 4/1, tel./fax +48 /42/ 630 58 41, tel. +48 /42/ 632 51 44,
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