Insolvency proceedings (consumer)
Consumer insolvency largely concerns private individuals but also affects small-scale traders or freelancers. The debtor is obliged, at first within the framework of an out-of-court debt settlement, to seek out-of-court settlement with creditors (instalments, respite, partial debt release, etc.). The support of a debt advice bureau or lawyer is recommended for this purpose. Should this prove unsuccessful, judicial debt reorganization proceedings commence. There are two steps to these. At first the court once again tries to achieve a settlement between the creditors and the debtor. In the event of failure, this is followed by the decision on whether to institute insolvency proceedings.
If the decision on whether to institute insolvency proceedings is positive, ‘simple insolvency proceedings’ take place. The court appoints a trustee to conduct the proceedings. After the insolvency proceedings have been concluded, there follows a period of good conduct, requested by the debtor, during which he has to assign his attachable income to the trustee for distribution to the creditors and fulfil other obligations. After this six-year ‘period of good conduct’ has expired, the debtor can be released from all residual debt.
First of all, the costs of proceedings must be paid before the quota is distributed to the creditors. The objective of consumer insolvency is to allow private debtors a debt-free new beginning. They should enter normal commercial life as soon as possible and support the national economy as consumers with money to spend.