When can you declare personal bankruptcy?

When can you declare personal bankruptcy?

"I'm in a very difficult financial situation. I've been in legal proceedings for a number of years and have already been the subject of a number of deeds of default.

I wonder what the benefits of personal bankruptcy would be?"

The two main forms of debt collection are seizure and bankruptcy. To put it very simply, debtors entered in the commercial register - in particular traders, companies, foundations and certain associations - are subject to bankruptcy proceedings, whereas private individuals are not in principle. What's more, bankruptcy proceedings are in any case excluded in certain situations, such as the collection of taxes, compulsory accident insurance premiums or periodic maintenance contributions.

Under article 191 of the Federal Law on Debt Collection and Bankruptcy, a debtor may apply for personal bankruptcy by declaring himself insolvent in court. However, the judge will only declare bankruptcy if there is no possibility of an amicable debt settlement. It should be noted that personal bankruptcy is open to any debtor, whereas amicable debt settlement (as defined by law) is reserved only for debtors who are not subject to bankruptcy. If you are not subject to bankruptcy, you must first try to reach an arrangement with your creditors. Only if such a settlement proves impossible or not feasible in the circumstances can you declare personal bankruptcy.

The main advantages of personal bankruptcy are the end of previous seizures, including wage seizures (future wages are therefore released), the end of individual lawsuits and the debtor's "better fortunes exception". It is therefore a way of suspending individual debt collection, which can be very stressful, and restoring a better quality of life on a day-to-day basis. However, pre-existing debts are not extinguished. They are in fact transformed into deeds of bankruptcy, on the basis of which creditors can launch new proceedings once the bankruptcy is over. It is at this point that the debtor will be able to invoke the exception of non-return to better fortunes, which enables him to protect himself from previous debts if he has not returned to a better financial situation, by which is meant that he does not have an income above the subsistence minimum enabling him to live in a relatively decent way. This is both an advantage and a significant difference between personal bankruptcy and seizure. A debtor subject to seizure has no possibility of raising such an exception against his creditors, if only because his assets are seized piecemeal and according to the debts to be repaid, whereas the bankrupt debtor has seen all his assets realised for the benefit of his creditors, which is why he is entitled to a "fresh start".

To file for personal bankruptcy, you need to submit a file to the Court of First Instance containing a clear request to be declared bankrupt, the reasons for the request, a history of debts, a statement that an out-of-court settlement is not possible, the method of payment of the costs associated with the bankruptcy, the current budget and a statement of debts with supporting documents. It should be noted that the costs associated with the personal bankruptcy proceedings are to be borne by the person filing for bankruptcy.