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I have debts – what effects does this have?

You are a private individual, have not made an official objection to a payment summons or your objection was rejected, and you fail to pay the amount demanded within the deadline required (i.e. within half a year from the 20th day following receipt of the summons). If all this applies to you, the bankruptcy office may order the seizure of your assets and your income in order to pay off the debt.

The same thing can happen in the case of a legal entity registered in the Commercial Register.

Seizable assets

In general, the following assets can be seized:

  • salary income of self-employed persons
  • unemployment benefit
  • pensions and lump-sum payments from a pension fund (2nd and 3rd pillars)
  • real estate
  • movable assets whose value is higher than the assumed liquidation costs (cars, jewellery, pictures etc.)

The law requires that the employer must be informed when a salary is seized. The bankruptcy office must agree to any deviation from this rule.

Non-seizable assets (list not exhaustive)

  • old age pension and invalidity benefits
  • supplementary benefits
  • family allowance
  • support from welfare, health and pension funds
  • pensions, lump-sum payments and other payments paid out to victims or their family members for bodily harm, impairment of health or the death of a person
  • essential items for personal use (clothes, household appliances, furniture etc.)
  • items essential to practising one’s profession

Minimum subsistence level in Switzerland

When a salary is seized, the debtor has the right to retain an amount to cover the minimum subsistence level for themselves and their family. This amount is determined on the basis of the personal and family situation of the debtor and according to federal guidelines.

Minimum subsistence level currently set at:

  • CHF 1200.- for individuals
  • CHF 1350.- for one-parent households in which one or more children live
  • CHF 1700.- for married couples, couples in a registered partnership or couples with children who live together but are not married
  • CHF 850.- for couples without children who live together but are not married (if both have an income)
  • CHF 400.-  for each child up to the age of 10
  • CHF 600.- for each child over 10 or in education

There are certain fixed living costs which are considered unavoidable and over and above the minimum subsistence level. These include:

  • Rent
  • Ancillary costs (heating etc.)
  • Premiums for compulsory health insurance, recurring medical expenses
  • School fees and expenditures
  • Expenses associated with exercising one’s profession, e.g. transport costs/car, expenses for meals out, social security contributions the for self-employed
  • Alimony
  • Costs for childcare
  • Any other necessary costs (such as the cost of moving house…)

Can I deduct my debts in my tax declaration?

Any debts may be deducted from assets when it is clearly indicated who the creditor is. However, repayments cannot be deducted from income.

Further consequences

It is becoming more common for companies to ask for proof of solvency when a person wishes to take out a rental or leasing agreement, telephone contract or bank loan. If you are in debt, such services may be barred to you.

Liability

Parents are not liable for their children’s debts, not even if they have agreed to the contract that their child entered into, for example the purchase of a computer. The parents are only liable (joint and several liability) if they have expressly undertaken to be so.

In the case of a married person or a person in a registered partnership a distinction is made between who is liable for a debt and with which assets the person is liable for any accrued debts:

Who is liable

Normally a person is not liable for the debts of their spouse or registered partner. Joint and several liability only exists when:

  • A person has expressly accepted joint and several liability, for example when both spouses or both registered partners have signed a loan agreement, or
  • Debt is accrued to meet the daily needs of the family or the partnership, for example food, small repairs, etc.

With which assets is a person liable

A married person is liable with their own assets for debts towards third parties if the couple are subject to the matrimonial property regime of the joint ownership of acquired property, which is the case for the majority of married couples, or have separate estates. If they have a joint estate, a regime that is rarely chosen, marriage property law distinguishes between general debts, which include only a few of the types of debt listed in the law, and personal debts. In the case of a joint estate regime, the indebted spouse is liable with both their own assets and with the joint estate (general debts) or with half of these joint assets (personal debts), so that the spouse without debts may also be liable with the assets in the joint estate.

The estates of persons in a registered partnership remain separate, unless they determine otherwise.