Consumer Insolvency

Who is eligible for the consumer insolvency procedure?

---

Consumer Insolvency

Who is eligible for the consumer insolvency procedure?

The consumer insolvency procedure is intended for individuals who are not currently working or have not worked as entrepreneurs, have no more than 19 creditors, and have no debts to former employees, social security, or the tax authorities. It is primarily intended for employees, retirees, and the unemployed, but also for former directors of limited liability companies (S.R.L.) and self-employed professionals who owe money only to banks.

The condition for initiating the procedure is that the debtor has either become unable to pay or is at risk of becoming insolvent. A person is considered unable to pay or insolvent if they can no longer meet their due payment obligations; A payment obligation arises when payment obligations cannot be met by the established due date.

The consumer insolvency procedure proceeds in two basic phases.

Phase I

First, the debtor must attempt to resolve the debts through an out-of-court agreement with creditors based on a detailed debt repayment plan. In this case, the debtor needs our assistance for the first time. We help you prepare the necessary documents for the insolvency proceedings and provide you with an overview of the debtor’s financial situation. With your assistance, we enter the data for the proceedings into software specifically designed for this purpose, draft correspondence to creditors—including a detailed debt repayment plan and a projected calculation providing an overview of the creditors. Only if the out-of-court settlement fails is a court proceeding necessary, namely Phase II.

Phase II

In this case, the debtor once again needs our assistance. With your help, we enter additional data for the proceedings into software specifically designed for this purpose and then prepare the necessary forms and attachments to initiate the court proceedings. The proceedings themselves are initiated by the debtor filing a petition for consumer insolvency. The court may, on its own initiative, attempt to broker an agreement between the debtor and the creditors, based on the debt repayment plan submitted by the debtor. Under certain conditions, the court has the authority to approve an agreement among creditors regarding the proposed debt repayment plan. If, in the court’s opinion, there is no chance that the proposed debt repayment plan will be accepted, it may immediately order the continuation of the proceedings to open the case. If the debt repayment procedure is abandoned or the judicial attempt to reach an agreement is unsuccessful, then a simplified insolvency procedure tailored to the consumer is carried out at a later stage of the judicial proceedings.

Finally: discharge of outstanding debts!

If the debtor behaves properly during the probationary period, the local court will grant discharge from outstanding debts at the end of this period. This means that debts existing at the time the insolvency proceedings were opened are canceled. The only exceptions are obligations arising from an intentional unauthorized act, fines, penalty fees, and administrative fines.

In addition, the court’s claims for payment of deferred court costs remain in force, provided they have not already been paid from the insolvent debtor’s estate or during the good conduct period.

If it is subsequently proven that the debtor deliberately breached their obligations during the good conduct period and thereby significantly impaired the satisfaction of creditors in the insolvency proceedings, the court may revoke the discharge of residual debts.

Standard Insolvency

Who is eligible for standard insolvency proceedings?

Standard insolvency proceedings are intended for individuals who are or have been entrepreneurs and a) have more than 19 creditors or b) have debts arising from employment relationships (wages/salaries) or c) have obligations to the tax authorities arising from unpaid income tax, making it particularly suitable for entrepreneurs or for individuals who have engaged in entrepreneurial activities.

The prerequisite for initiating the procedure is that the debtor has either become unable to pay or is at risk of becoming insolvent. A person is considered unable to pay or insolvent if they can no longer meet their due payment obligations; A payment obligation arises when payment obligations cannot be met by the established due date.

Conducting the standard insolvency procedure

Unlike the consumer insolvency procedure, the standard insolvency procedure involves only one phase: recording the debtor’s data and generating the necessary forms along with the corresponding attachments.

This is where we step in to help. We assist you in preparing the necessary documents for the insolvency proceedings and in gaining a comprehensive overview of the debtor’s financial situation. With your assistance, we enter the data for the proceedings into software specifically designed for this purpose and subsequently prepare the necessary forms along with the corresponding attachments to initiate the proceedings.

The procedure itself is initiated by the debtor’s application to open standard insolvency proceedings. The court appoints an administrator who contacts the creditors listed in the application and requests that they register their claims.

The procedure is followed by a probationary period. This lasts six years from the opening of the insolvency proceedings. If successfully completed, the court will grant discharge from outstanding debts.

Finally: discharge from outstanding debts!

If the debtor behaves properly during the good conduct period, the local court will grant discharge from outstanding debts at the end of this period. This means that debts existing at the time the insolvency proceedings are opened are canceled. The only exceptions are obligations arising from an intentional unauthorized act, fines, penalty fees, and administrative fines.

In addition, the court’s claims for payment of deferred court costs remain in force, provided they have not already been paid from the insolvent debtor’s estate or during the good conduct period.

If it is subsequently proven that the debtor deliberately breached their obligations during the good conduct period and thereby significantly impaired the satisfaction of creditors in the insolvency proceedings, the court may revoke the discharge of residual debts.

For those affected, having debt means much more than simply being unable to meet their payment obligations.

The situation is linked to ever-increasing pressure, fear of the future, and feelings of failure and worthlessness. Growing shame and despair increasingly isolate over-indebted individuals from their “normal” lives. It is not uncommon for their health to suffer, as well as their emotional well-being and family life. A large number of our clients report typical stress symptoms, such as insomnia, palpitations, and anxiety, before taking the first decisive step of reaching out to us and finally seeking professional help.

Even after many years in practice, we are still amazed by how many myths and fears surround the topic of consumer insolvency. None of these correspond to reality! It offers you a legal way to get out of debt and be completely debt-free after a period of approximately 3 years.

We guide you through the process until the application is filed with the competent court. This includes not only the initial correspondence with creditors but, in particular, the complete and accurate completion of the comprehensive application. By deciding to contact us, you are taking the first decisive step toward debt relief and a return to normalcy.

In individual cases, an out-of-court settlement with creditors makes sense. Unfortunately, we often encounter a completely unrealistic expectation in this regard. An agreement to pay in installments or a corresponding settlement must be reasonable. If you can secure approximately 30% of your debts, for example through friends or family, let us try to reach an agreement with your creditors.

If you do not have this financial support, please say goodbye to the idea of resolving your problem through an out-of-court settlement.

Statistically speaking, approximately 9 million individuals were over-indebted in 2025. Clearly, you are not alone with your problem!

Take advantage of our knowledge and experience and schedule an appointment to meet with us.

We look forward to helping you!

---