When consumer bankruptcy is declared, a credit repayment plan is generally drawn up. It is not prepared only if the court finds that the bankrupt’s personal situation clearly indicates that he would not be able to make any repayments under the repayment plan.
So if the debtor, for example, has current income above the value of the minimum wage, the court will probably determine the creditors’ repayment plan.
The bankruptcy court decides how it will proceed
On what basis is the preparation of such a plan based? Insolvency proceedings after bankruptcy usually take place in two stages. The first is the liquidation phase, consisting in the liquidation of the bankrupt’s assets and cashing them in to meet their obligations to creditors.
The second is the phase of implementation of the creditors’ repayment plan , the course of which is determined, among others based on what was achieved during phase one.
At the first stage of bankruptcy proceedings, the trustee takes liquidation measures, which usually involve selling off the bankrupt’s assets, valuable movables, and above all owned and inhabited property. When selling a debtor’s apartment, you can usually get the most money to pay the debtor’s obligations to your creditors, which is why this is usually the main point of liquidation.
The sale of all home appliances and electronics is another cash option
That is often necessary and also helps to satisfy creditors’ claims. However, the debtor has the right to keep primarily personal belongings and things he needs to work for a living. This phase ends when the bankrupt leaves the previously occupied housing unit.
The bankruptcy court is legitimate to apply for determining the repayment plan of creditors, while the commercial court is authorized to make binding decisions in this respect. The repayment plan is established in the form of an order and is created on the basis of the personal and financial possibilities of the bankrupt. If the court decided to terminate the bankruptcy process in the first phase, only half of the creditors repaid would be injured.
Usually, each of them counts on total financial satisfaction
That is why, as a rule, you do not resign from the second stage of bankruptcy. The repayment plan is established for up to 3 years, unless it is possible to repay the debt faster. It is no longer based on selling the bankrupt’s assets, but on regular repayment of liabilities.
After this period, if the bankrupt has been responsible responsibly so far, they are canceled by the court . If his income allows for full repayment of all liabilities, this is obviously included in the three-year repayment plan so that the debt is actually repaid in full.
The bankrupt must therefore ensure regular income from which he will be able to fulfill his obligation according to the agreed repayment plan of the creditors. Both stages of the bankruptcy process are very important and must be treated responsibly by the bankrupt.