Consumer Bankruptcy and Lack of Property – Loans For Indebted

Problematic turbulence related to debts and other financial problems may lead to the state of consumer bankruptcy. But what is the question of not possessing any property? Can you formally declare bankruptcy without him? Consumer bankruptcy and lack of assets – let us learn the most important relationships between these concepts.

Consumers having problems with timely repayment of liabilities may fall into the so-called a spiral of debt that, among other things, can result in serious problems with your finances. Due to the associated turbulence and, for example, financial problems resulting from job loss, the consumer may lose liquidity.

However, how does the fact of not having any valuable part of the property come to the notice of consumer bankruptcy? This situation is most often announced in the case of court enforcement officers who want to attempt to confiscate part of the debtor’s property towards the enforcement of the sum due. A consumer who does not own any precious assets may, however, avoid it. Can a person who does not have property declare a state of bankruptcy? Let’s see.

Consumer bankruptcy and lack of property

Consumer bankruptcy and lack of property

The issue of consumer bankruptcy and lack of property, yes, looked completely different a few years ago. Until the amendment was adopted from December 31, 2014, the regulations stipulated that the debtor wishing to declare a property bankruptcy must also own any property at the same time. For 5 years, these provisions already include only insolvent entrepreneurs. At present, there is no longer any question about the preservation of property by consumers.

What does it mean? In practice, even if you do not have any assets that can create assets, the law allows you to declare consumer bankruptcy. What does this term mean at all? Consumer bankruptcy is nothing more than a reduction or cancellation of the obligations of a natural person in the event that it becomes insolvent (not through fault of its own).

I am talking about simply losing any financial resources to cover financial arrears. The lack of this ability must be permanent and this fact must be proven by the consumer. However, after the aforementioned amendments to the 2014 regulations, it does not matter whether the consumer has any assets or no property. It must be insolvent – that’s it.

How to file a petition for consumer bankruptcy?

In order to submit an appropriate application for the declaration of consumer bankruptcy, an application for the declaration of consumer bankruptcy in the district bankruptcy court should be submitted. The commencement of proceedings always starts at the debtor’s request, because the creditors do not have the right to apply for the debtor’s bankruptcy.

Consumer bankruptcy can be annulled once every 10 years, motivating it with various causes. They should be extraordinary and independent of the debtor. For example – illness, job loss, accident, construction disaster or other random events that may lead to financial collapse. Any reasons given by the consumer will, of course, be dealt with in court proceedings.

Consumer bankruptcy and bailiff

Consumer bankruptcy and bailiff

What does it mean in practice to declare consumer bankruptcy? If you are involved in bailiff’s actions, the case for people without assets is simple. As of the date of the declaration of bankruptcy, all enforcement proceedings that were carried out prior to the formal announcement of consumer bankruptcy are suspended by the consumer. The bailiff has no right to initiate new enforcement proceedings if the claims are already subject to bankruptcy proceedings.

In this way, the consumer can focus on actions aimed at improving his financial and property situation for the duration of the bankruptcy proceedings instead of the bailiff’s actions.

How much does it cost to declare consumer bankruptcy

In order to submit an appropriate application to the court, you have to bear additional costs. For one application, the court charges a one-off fee of PLN 30. In addition, if the debtor submitting the application is assisted by services such as a legal counselor or a professional attorney, an additional 17 zlotys stamp duty is imposed. However, this is not necessary, and the consumer can prepare all necessary documents with the application on his own, but it is advisable to seek advice from a person with professional knowledge.

But what if the financial condition of the consumer is so bad that he is unable to cover the costs of bankruptcy proceedings in court? This issue is set out in the Bankruptcy Law (Article 491). He says that if the assets and funds of an insolvent debtor do not allow to cover the costs of proceedings, they temporarily transfer to the State Treasury. When will these costs be paid back?

This will be necessary when the debtor regains financial liquidity through permanent employment and the associated monthly income. Another way may be to cash in a part of the property in which the debtor’s possession will come. But what if the debtor does not have to pay the costs of the proceedings for a long time? Then, the amount due to the Treasury may be remitted if a further, permanent lack of property is found with the consumer.

How long does a consumer bankruptcy last without assets?

Stage I - preparation and interview with an expert

Many consumers who have declared consumer bankruptcy wonder how much the proceedings will continue. Generally speaking – it depends. It is a process spread over time, divided into several stages. Depending on how long it takes to complete specific procedures, this will translate into the duration of the entire consumer bankruptcy phase without assets.

Stage I – preparation and interview with an expert

  1. The debtor should consult an attorney in order to make findings about the current financial situation and the degree of its breakdown.
  2. It is worth estimating the number of liabilities, their amount, their duration and the consequences that the debts owed so far (including bailiff enforcement).
  3. As a result of the analysis of the current financial condition, the consumer should set up a plan of action in the face of the current crisis with the lawyer’s advice.
  4. At the end of the arrangements, all that remains is to submit an application for the declaration of consumer bankruptcy to court.

Stage II – how much is waiting for consumer bankruptcy?

  1. It usually takes an average of 3-4 months.
  2. Based on the submitted documentation, the court assesses that it is advisable to declare consumer bankruptcy.

Stage III – consideration of the application

  1. In the case of a positive court decision on the submitted application, consumer bankruptcy becomes a fact.
  2. Creditors’ actions vis-à-vis the consumer are withheld.

Stage IV – striving to improve the financial situation

Establishing consumer bankruptcy does not mean that the consumer is already safe from the financial problems in which he has fallen. Contrary. The consumer is obliged to undertake actions aimed at improving the financial situation.

An example is the start of job search. The consumer can thus gain a chance to restore financial liquidity. Consequently – he can build his property anew. It is worth remembering that if the above-mentioned costs of proceedings could not be covered by the debtor, then after improving its financial condition, the State Treasury will seek reimbursement.

The issue of creditors is similar. If the consumer regains financial liquidity allowing for the repayment of existing liabilities, he should apply for it to the court. They will set a deadline for paying off debts or will cancel them if they meet the conditions set out in the law. The repayment plan of the creditors is implemented for 36 months, or 3 years. This means that the state of consumer bankruptcy may last for years, although the improvement of the financial situation may take place more quickly with the consumer. It all depends on how decisive action will be taken to regain financial liquidity and free yourself from debts.