Personal bankruptcy

In the case of bankruptcy of an independent entrepreneur or an entrepreneur with a sole proprietorship, it is referred to as a personal bankruptcy. In the event of bankruptcy of a natural person, the business assets of the bankrupt person are seized by operation of law. Entrepreneurs with a company without legal personality, such as a sole proprietorship, are also personally liable for debts in the event of bankruptcy. If there are insufficient business assets to pay off the debts, the attachment also includes the private capital of the bankrupt person.

Bankruptcy of a natural person

In addition to sole proprietorships and freelancers, private individuals too can be declared bankrupt. In both situations, this is referred to as bankruptcy of a natural person. The consequences of personal bankruptcy are often serious. Bank accounts are frozen. The bankrupt person may not make payments without permission. Bankruptcy also has consequences for a partner if the bankrupt is married in a community of property. Although the partner is not bankrupt, he or she no longer has access to any joint property and funds. The partner’s income falls within the calculation of the amount to be released (funds for living expenses). All income in excess of the set amount (to be released) comes under the bankruptcy.

Consequences of personal bankruptcy

Is an (independent) entrepreneur no longer able to pay off his debts and are there two or more creditors? In that case, a person can file for personal bankruptcy at the court. After submitting the bankruptcy petition the court appoints a bankruptcy trustee. The bankruptcy trustee will gain full control and decision-making authority over the bankruptcy estate and funds of the bankrupt person. With the proceeds from the sale of assets and the collection of possible outstanding claims, the bankruptcy trustee aims to pay the creditors on the basis of a fixed ranking order. Another consequence of personal bankruptcy is that the bankruptcy of the person concerned is included in the Central Insolvency Register and the Government Gazette.

Personal bankruptcy register

The Central Insolvency Register provides an overview of bankruptcies, suspensions of payment and debt restructuring for natural persons. This information, which is kept in the local registers of courts, can be consulted up to six months after the ending of insolvency. Personal bankruptcy is recorded in the insolvency register as well. Bankruptcy reports are published in the public register. These can be consulted, free of charge. In a bankruptcy report, a bankruptcy trustee describes the state of the estate and creditors can closely monitor the current situation. Bankruptcy records of personal bankruptcy in the register are not public.

Bankruptcy and Wsnp

In the event of personal bankruptcy, the bankrupt person may request the court to refer the bankruptcy to the Wsnp, the Debt Restructuring (Natural Persons) Act. This request can only be submitted if the bankruptcy has been filed for by the entrepreneur and the relevant entrepreneur meets one of two set requirements for bankruptcy and Wsnp: • Shortly before the bankruptcy, an attempt was made to reach an amicable debt settlement. • During the bankruptcy proceedings, the bankruptcy trustee has determined that a composition agreement is not feasible. The debtor can also ask the municipality to start a Wsnp procedure for him. The statement and application must be handed over to the court by the municipality. Sending the application to the court directly is not possible. The court decides. It examines whether an amicable process is indeed not possible.

Personal bankruptcy: contact without obligation

Are you facing the possibility of personal bankruptcy or have you been declared bankrupt as a person? Our specialists in bankruptcy law are ready to represent you. During an informal meeting, we will map out your situation and try to find a suitable solution. Avoiding bankruptcy is of course always the most favourable outcome. Therefore, make sure that you take timely action, refrain from taking irresponsible financial risks and seek expert advice. For more information, feel free to contact our experienced insolvency lawyers.