Consumer bankruptcy – you will get rid of debts in three years!
On January 1, 2015, a new act on consumer bankruptcy entered into force. Previously, unfortunately, it was a legal rubbish, because within a few years only a few people managed to use it. The amended law had one serious disadvantage, but also several very important advantages in favor of indebted people. Its effectiveness was of course dependent on the court’s approach. In practice, however, it turned out that it did not look bad. However, it could look much better and hence in subsequent years new amendments were introduced to the act on consumer bankruptcy. January 1, 2015 was a landmark day for debtors who had a real opportunity to get rid of debts and start living again. Not only could they say goodbye to debt collectors and bailiffs, they would get rid of debts in three years.
Who can apply for the declaration of consumer bankruptcy?
Its benefaction, and thus the exit from the debt or credit loop, can be used by natural persons who do not run a business. They must be people who have lost their financial liquidity and the ability to pay their liabilities (insolvent) not through their own fault. This is good news for those who exceeded the cost of living connected with servicing obligations, but not for everyone.
1. The gross negligence may outrage your chances of announcing consumer bankruptcy
If you think that you will quit your job because the bailiff takes the lion’s share of your salary and go to court for bankruptcy, then you are in great error. The same will be the case when you simply “refuse” repayments for a trivial reason. Then your application will also be treated negatively.
The new Consumer Bankruptcy Act contains a provision that says that if “the debtor led to his insolvency or significantly increased its degree intentionally or due to gross negligence”, the court will reject his application. As an error, it is possible to read the specification of what the legislator describes as “gross negligence”.
An application for bankruptcy may be submitted only by a natural person who has become insolvent and has lost the ability to service obligations due to special circumstances independent of her:
- losing your job not because of the employee’s fault,
- change in economic factors affecting the repayment capacity of the loan (change in the currency rate in which the loan is repaid, increase in maintenance costs),
- accident, illness or random event that precludes the possibility of further work,
- disability causing a reduction or loss of income,
- and other.
We can talk about insolvency when you do not regulate your obligations on time or do not do it at all, especially in situations when:
- you do not pay installments in whole or in part,
- you delay the payment of installments,
- you do not pay or are late with the payment of bills for accommodation, electricity, gas, telephone, etc.
2. Unfortunately, a lot depends on the courts…
Due to the above-mentioned unfortunate provision concerning “gross negligence” much in the matter of bankruptcy depends on the courts and their favor towards the debtor and his situation. You can only count on the fact that the judges will not look for a “hole in the whole” for strength, or interpret the facts to the detriment of the debtor.
An application for declaration of bankruptcy should include as precisely as possible circumstances that justify its submission and their specific substantiation. An applicant wishing to avoid being accused of “gross negligence” should take a particularly serious and meticulous approach to this part of the application.
It is difficult to determine how this will affect the judgment of the court, although it is well known that in this country the court is not for man and man for court. The solution to this dilemma will bring time and further judgments in these matters that will be made.
Who can not declare consumer bankruptcy?
The act on consumer bankruptcy specifies that it can not be announced by a debtor who:
- he became insolvent by his own fault and there were no extraordinary circumstances justifying the non-payment of sickness or accident obligations,
- he quit his job, being aware that he will not be able to regulate his commitments as a result,
- the employment contract was terminated with him or his consent (agreement of the parties),
- he took out a loan when he was already insolvent, i.e. he signed another loan agreement, lying in that time with the repayment of other loans or loans,
What when you can not declare bankruptcy ?:
- How to get out of the debt and bank debt loop?
Why were the entrepreneurs told NO?
It is strange that the act on consumer bankruptcy omits entrepreneurs running a sole proprietorship, whose companies are declining. It is unfair to take away their chance of returning to normal functioning without debt. This can be explained only by the fact that the State, by allowing the bankruptcy of a natural person through the courts, exposes banks and other creditors to losses. In the case of entrepreneurs, debts often result from arrears in ZUS and the Tax Office. Here, perhaps, is the answer to the question why the bankruptcy of those running the business was excluded. The state does not want to take it by itself, preferring to act like Janosik and receive rich banks to give to the poor (redeeming their debts). Why take it away when State authorities in the form of ZUS and the US can prosecute debtors until their death.
You will not fall down right away – first the repayment plan for the creditors
The act on consumer bankruptcy determines that the court will pay attention to the income obtained when considering a bankruptcy petition. In the event of their absence, the applicant’s abilities shall be taken into account in order to achieve such income taking into account the costs of his and his family’s maintenance. In this assessment, housing needs and costs play an important role. Knowing the debtor’s income and costs, the court will determine its capacity to satisfy creditors. This will be included in the decision about the amount and manner of payment of the creditors. If you earn a small amount and have a family of three, the court may specify in the repayment plan of the creditors the monthly installment at the level of, say, PLN 200.
The court, when determining the plan for repayment of creditors, takes into account all debtor’s claims, regardless of their total amount. The debtor is responsible for all assets, which are valuated and cashed, and the receivables are repaid. A quicker application may be counted by those who have no assets on the day of submission. However, before filing for bankruptcy, you can not deliberately dispose of your property by selling it out. Such proceedings may be regarded as a deliberate action and, consequently, lead to the rejection of the application.
What if the debtor’s income increases after determining the repayment plan?
- What is worse debt collector or debt collector?
Three years and after debts!
An important and very beneficial provision of the Act is that the creditors’ repayment plan can be fixed for a maximum of 36 months. After this period, the debtor is released from all obligations.
If the debtor does not have property and the court determined the above amount of PLN 200 as an installment in the creditors’ repayment plan, then of all debts (regardless of their total amount) will come out for PLN 200 x 36 months, that is for PLN 7,200.
If you have financial problems and the repayment of liabilities is beyond your possibilities, then as soon as possible, take advantage of the opportunities provided by the act on consumer bankruptcy and submit a request for its announcement!