Many consumers have a problem with increasing indebtedness. Very often, the accumulating interest and fees force a person to incur further financial obligations in order to cover the previous outstanding debt, which leads to a situation in which the debt gets out of control and the consumer himself is no longer able to pay it back.
The legislator anticipated this scenario by introducing the possibility for the consumer to file for bankruptcy. The purpose of this procedure is to liquidate the consumer’s debt by developing his repayment plan and canceling the remaining debt after a 3-year period of implementing the plan.
The application for consumer bankruptcy is submitted on an official form, in which the bankrupt indicates the components of his property, his receivables and their amount, the possibility of earning, and the justification of the application, which should indicate why he is unable to pay the debt (and that its creation was not related e.g. by intentional action or gross negligence).
If the bankruptcy petition is granted, the Court, pursuant to Art. 491 (5) of the Bankruptcy Act, it issues an order declaring bankruptcy, in which, inter alia, it appoints a receiver and calls on the bankrupt’s creditors to notify the receivables to the receiver. It should be noted that, as a rule, all assets of the bankrupt consumer are included in the bankruptcy estate as of the date of declaration of bankruptcy. This means that the assets of the bankrupt will be subject to liquidation in order to satisfy creditors, and the management will be exercised by a trustee appointed by the court. This is because the purpose of bankruptcy proceedings is not only to free the debtor from his debts (or to allow him to pay his liabilities), but also to satisfy the creditors as much as possible.
The receiver’s tasks include the preparation of an inventory of the property and its liquidation. In practice, disputes between the bankrupt and the creditor most often arise over the determination of whether or not a given asset is part of the bankruptcy estate. This issue is defined in Art. 63 of the Bankruptcy Act and stipulates that the bankruptcy estate does not include, inter alia, property not excluded from bailiff enforcement under the Code of Civil Procedure.
When submitting a petition for bankruptcy, it should be remembered that if the petition is approved, all the debtor’s assets will be liquidated. It is therefore worth considering whether the possible debt relief is worth, for example, the sale of the bankrupt’s flat or his car by the trustee. At the same time, it should be remembered that the sale of an apartment under bankruptcy proceedings is more advantageous for the consumer than if it were to take place through bailiff enforcement, because the end of bankruptcy proceedings is, in principle, associated with debt cancellation.
In order to carry out bankruptcy proceedings, it is worth using the help of a professional attorney, both for the substantive preparation of the application for bankruptcy, as well as to control its correctness and ensure that it runs efficiently.