Do you remember one of my articles on how not to fall into the spiral of debt? Ideas were probably not bad, but in practice for many people they are impossible to introduce anyway. Therefore, this time I will deal with a topic that interests thousands of Polish debtors. Consumer bankruptcy is still not well recognized, and the new regulations regulating this law come into force.
Consumer bankruptcy enjoys marginal interest
The concept of consumer bankruptcy has been in force in Polish law since 2009. This is a long time, but statistics show that only about 100 people out of 2,000 applications have so far benefited from this privilege. Reason? Prosaic. To declare that you are insolvent, you had to have a good fortune. This paradox, however, has to go down in history.
Until now, the person who wanted to announce consumer bankruptcy (or personal bankruptcy – that’s another name) had to pay PLN 200 for submitting the application. In addition, the court assessed whether such a debtor has sufficiently high assets to cover his creditors and the receiver. For most people who were extremely financially deprived, it was an impassable barrier.
Further restrictions resulted directly from the act. Consumer bankruptcy could only be declared by a natural person who does not conduct business. She also could not deliberately or through gross negligence lead to her tragic financial situation. In practice, courts agreed to declare consumer bankruptcy only to debtors who have made problems as a result of even illness or falling victim to fraud.
Amendments to the act on consumer bankruptcy
Since 2015, new regulations have entered into force, determining how consumer bankruptcy should take place. First of all, the application fee has been reduced – it is now PLN 30. The rest of the fees (mainly remuneration of the receiver) are covered by the State Treasury. The debtor must return these funds under the repayment plan, which I will write about in a moment.
Bankruptcy can still be advertised only to people who have been in debt for objective reasons. The court may also consider that such debtor caused problems as a result of ignorance or misunderstanding of financial mechanisms. The entire bankruptcy process can last up to three years.
How does the process of declaring consumer bankruptcy occur?
After submitting the application, the debtor waits for the trial in court. This is the detailed procedure checks whether the person is able to pay at least part of their obligations. If so, an exact repayment plan is set.
The debtor’s interest is always given priority, not creditors. So if the court finds that depriving the debtor of an apartment will be too much of a burden for him, he can exclude this property from the assets intended for sale in order to cover his obligations.
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In another situation, the court will submit an application for the sale of a flat, house or plot, but at the same time, it will oblige the receiver to transfer to the debtor the amount necessary to cover the costs of renting a new flat for up to 2 years .
In the repayment plan, the court will take into account all debts of the applicant and will certainly first want to satisfy the State Treasury’s receivables, e.g. overdue taxes at the Tax Office. If the plan clearly shows that the debtor does not have enough funds to repay specific obligations, they will be canceled.
Is consumer bankruptcy worth it?
In my opinion, this should not be considered. Achieving the level of indebtedness that does not allow us to function normally is a huge tragedy. Of course, only on the condition that we have not led deliberate action and life beyond the state to such a situation.
Let us remember that the act on consumer bankruptcy is not in itself to be a trick for the crooks. That is why the announcement of personal bankruptcy is not so simple and often goes on for years.
Consumer bankruptcy should certainly benefit people who are in no way able to pay their creditors. Most often they fell victim to cheap loans (also mortgages) and – especially – short-term loans. In a situation where such a man would just hit the street, the definitely more reasonable (also from the point of view of you) solution is to reach out to him a helping hand.
As a rule, however, consumer bankruptcy is not a method for repaying debt. It is only announced when the debtor has no physical means to repay his obligations. After the declaration of bankruptcy, formal debts go down in history. That is why the introduction of the bill bombarded all financial institutions.
Consumer bankruptcy is certainly a very beneficial solution for people who would normally have to pay their debts at the expense of meeting basic needs. By specifying the repayment plan, the court will never allow the debtor to remain without a livelihood.
What do you think about consumer bankruptcy? Do you feel sorry for the debtors, or do you think they are to blame? In your opinion, the provisions of the Act are legible and can help in resolving the life dramas of many people?