Individuals also have the option of declaring bankruptcy. However, we must remember that such bankruptcy also takes place on specific terms and the debtor also has specific duties. What exactly does the bankruptcy of a private person involve?
Consumer bankruptcy or personal bankruptcy is carried out for individuals who do not conduct business. It is possible from March 31, 2009. Prior to this date, bankruptcy was possible only in relation to entrepreneurs.
The new provisions allow those who are not entrepreneurs to take advantage of this procedure also in the event of a state of insolvency due to their independent and exceptional circumstances. It is worth pointing out that the requirement of exceptional circumstances, independent of the debtor, makes the declaration of bankruptcy of a private person quite difficult.
The bankruptcy of non-entrepreneur concerns mainly:
• persons employed as part of an employment relationship – when a person loses his employment due to exceptional and independent circumstances, for example, because of a serious, sudden illness, an unpunished employment termination, he can file for bankruptcy.
• members of the management boards of capital companies – this is related to the liability of members of the management board in case of ineffective enforcement against the company
Consumer bankruptcy is distinguished by the features of arrangement bankruptcy.
It recommends to reduce or discontinue the obligations of a natural person. The court decides on the declaration of bankruptcy at the request of the debtor. It is worth pointing out that bankruptcy can be declared once every 10 years. To start the appropriate court proceedings, we must submit an application to the competent bankruptcy court and pay a fee of PLN 30.
A consumer wishing to declare bankruptcy is obliged to indicate the components of his property to the trustee. However, all assets that are necessary to ensure maintenance of the existential basis of the debtor’s and his family’s functioning are not covered by the bankruptcy.
Real estate subject to occupation, for example, real estate, car, is auctioned, and the money obtained is transferred to repay the debt. It is worth pointing out that when the real estate is being auctioned, the debtor receives funds for renting a flat.
When the sums from the auction will not be enough to satisfy the creditors, the court may additionally prepare a special repayment plan. It is prepared in such a way as to take into account current debtor’s earning capacity and life needs. Repayments are spread over a period of 3 years – in exceptional cases, this period can be extended by 2 years. In certain cases, the court may also choose not to designate such a plan.
If the debtor repays his liabilities in a timely manner, then the rest of his debts will be able to be redeemed by law, which will lead to total debt reduction.
As a result, consumer bankruptcy allows the debtor and his relatives to live a dignity, but at the same time, it is possible to satisfy the creditors from the property of the debtor representing the right value and the repayment plan.