Personal bankruptcy: procedure and consequences
How personal bankruptcy is opened
The bankruptcy of an individual can be declared following bankruptcy proceedings, reserved for certain categories of debtors (in particular persons registered with the commercial register), or in special cases provided for by the Debt Enforcement and Bankruptcy Act (DEBA), by decision of the bankruptcy judge (art. 171 ff. DEBA).
The effects of opening bankruptcy
Upon the opening of bankruptcy, the debtor loses the right to dispose of their seizable assets, which are transferred to the bankruptcy estate managed by the bankruptcy office. Individual debt collection proceedings against the debtor already underway are suspended in favour of the collective bankruptcy procedure.
Liquidation
The bankruptcy office draws up an inventory of the debtor's assets, sells them, and distributes the proceeds among creditors according to the order of creditor classes set by law (art. 219 DEBA), with certain claims such as wages or maintenance claims benefiting from a privileged rank.
The certificate of unpaid debt
When the proceeds of liquidation are insufficient to cover all claims in full, unpaid creditors receive a certificate of unpaid debt, which certifies the unpaid amount and allows them, under certain conditions and time limits, to initiate new debt collection proceedings if the debtor's financial situation improves.
Frequently asked questions
Can anyone be subject to bankruptcy proceedings?
No, bankruptcy proceedings are reserved for certain categories of debtors, in particular persons registered with the commercial register; other individuals are in principle subject to seizure proceedings instead.
What happens to my assets in personal bankruptcy?
Your seizable assets are transferred to the bankruptcy estate, managed by the bankruptcy office, which sells them and distributes the proceeds among creditors according to the legal order of creditor classes.
What is a certificate of unpaid debt?
The document issued to a creditor when the proceeds of liquidation are insufficient to cover their claim, certifying the unpaid amount and allowing, under certain conditions, new debt collection proceedings if the debtor's financial situation improves.