Bankruptcy or apply for bankruptcy

Who can file for bankruptcy?

Before individuals can file for bankruptcy, they must first try to agree with the creditors.

There is a distinction between different forms of bankruptcy- 7 or 13 best way? Individuals go through the so-called consumer or personal bankruptcy. This is a simplified procedure. For legal entities, including companies, as well as self-employed and freelancers, however, the rule insolvency is provided.

Many debtors ask themselves when it comes to insolvency when they need to register. In the case of private persons as well as legal persons, according to § 17 of the Insolvency Regulation (InsO), the insolvency is a reason for opening. A debtor is insolvent if he can not meet his due payment obligations. Even in the case of imminent insolvency, those affected can file for bankruptcy.

According to § 19 InsO, legal persons must also apply for bankruptcy if there is over-indebtedness. This is the case if the assets of the debtor no longer cover existing liabilities. Exceptions exist when the continuation of the company is predominantly probable.

How can creditors register a claim? If the insolvency of a debtor has been opened, they must not turn to the competent bankruptcy court, but to the insolvency administrator. 

Private bankruptcy – How to proceed

Bankruptcy: Where is this possible? The competent district court is usually the insolvency court.

If individuals wish to file for bankruptcy, they can not do so immediately. Rather, first of all, some steps are necessary, which must be mandatory. Before the personal bankruptcy, debtors are obliged to make an out-of-court settlement attempt with the creditors. They need to make an overview of their assets and give creditors a plausible explanation of how they intend to pay off their debts.

Debtors must seek advice from a suitable agency. These include, for example, lawyers, tax consultants or organizations that offer non-profit debt counseling. It is important that this body must be authorized to issue a certificate of the failed attempt at unification.

Only with this certificate debtors can then register the actual bankruptcy. For this purpose, victims must contact the District Court, which is responsible for their place of residence. As a rule, the competent insolvency court is also located there.

For debtors to file personal bankruptcy, they must submit various documents. Of great importance here are the official forms for insolvency proceedings and the discharge of residual debt, which have a scope of 45 pages. In addition, it is usually still necessary to fill certain facilities. If private individuals wish to file for bankruptcy, extensive formalities are on the agenda. Debtors should seek competent help, such as debt counseling.

Please note: In contrast to personal bankruptcy, the above-mentioned attempt of out-of-court settlement does not apply to bankruptcy. Companies and the self-employed can register the company insolvency accordingly immediately.