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If you have debts which you are unable to repay (insolvency) you can apply to the bankruptcy office where you live and declare yourself bankrupt. Alternatively, you can get personal advice and support from one of the many debt advice organisations.
Bankruptcy usually affects legal entities which are registered in the Commercial Register. However, private individuals can also declare themselves bankrupt under certain circumstances.
The purpose of the bankruptcy procedure is to collect a list of all creditors (the schedule of claims) and to repay, if possible, the debts owed to each one in the order they appear on the list. Any money raised from seized assets is used to repay the debt.
During the bankruptcy proceedings, all open payment summons (including seizure) against the debtor are frozen. In addition, no new payment summons can be issued for debts incurred prior to the commencement of bankruptcy proceedings.
Natural persons can continue to pursue their professional activities and dispose of the money they earn after the commencement of bankruptcy proceedings. The owner of a sole proprietorship, however, cannot make use of the assets of the company that the bankruptcy office considers can be seized.
Any debts which are not completely repaid are not cancelled, but interest no longer needs to be paid on them.
If some debts still remain unpaid at the end of the bankruptcy proceedings, and the proceedings were not terminated due to a lack of assets, the bankruptcy office issues a certificate of loss for any remaining debts. This shows the amount of the loss incurred by the creditor and whether the debtor acknowledges this amount – in this case, the certificate of loss is official proof of this. The certificate allows the creditor to collect any debts within a period of 20 years, should the financial situation of the debtor improve to such an extent that he or she can accumulate new assets.