For debtors and bankrupts
A petition in bankruptcy
A petition in bankruptcy is the first step towards redeeming liabilities. Filing a petition in bankruptcy should be preceded by a thorough analysis of whether a person meets the conditions to declare consumer bankruptcy. A negligently prepared petition may entail negative consequences, including depriving a person of the right to redeem their liabilities.
Representation at court hearings
After a petition in consumer bankruptcy has been filed, the court may appoint a hearing at which they will interrogate the applicant as to the existence and causes of insolvency, the applicant’s creditors, the state of property, etc. Next, either a decision declaring bankruptcy is issued, or the court dismisses the petition.
The debtor files a request for a repayment plan. In the request they propose, depending on their earning capacity and maintenance costs, whether and to what amount they will able to pay off their debts during a period of up to 3 years. The court is not bound by the position of the bankrupt. Creditors may challenge the proposed repayment plan.
Changing the repayment plan
Should a bankrupt prove to be unable to fulfil the obligations set out in the plan to repay his or her creditors, the court may, at the bankrupt’s request and after hearing his or her creditors, change the repayment plan. The court may also extend the time for repayment of liabilities for a longer period, but not exceeding 18 months.
In the event of a substantial improvement in the state of the bankrupt’s assets during the period of executing the repayment plan, resulting from reasons other than an increase in their remuneration or income from the earning activity personally performed by them, each of the creditors and the bankrupt may request that the plan to repay creditors be changed.
Repeal of the repayment plan
The repeal of the repayment plan will mean that the debtor’s liabilities will not be redeemed. The repeal of the repayment plan can take place in the event of failure to fulfil by the bankrupt his or her obligations set out in the plan to repay creditors, as well as in other cases, e.g. hiding the debtor’s assets. The decision to repeal the repayment plan can be appealed against by the bankrupt.
Discontinuance of bankruptcy proceedings
The discontinuance of bankruptcy proceedings closes the road to redeeming liabilities. It may occur, for example, when the bankrupt fails to indicate, or does not release to the trustee in bankruptcy all of his or her assets, necessary documents, or in any other way fails to perform his or her obligations. The decision to discontinue proceedings can be appealed against.