Due to the significant liberalization of the rules for the processing of debtors’ applications (after changes in 2015), the number of people using the possibility of bankruptcy is systematically growing. In 2017 alone, consumer bankruptcy announced 5.5 thousand. people. Currently, the Ministry of Finance is preparing further facilitations in the procedure, giving the indebted persons a chance to start a new life.
Data from the Central Economic Information Center show that more and more people are choosing to declare consumer bankruptcy. After the introduction of changes facilitating the bankruptcy process, in 2015 over 2,000 bankrupt companies were able to declare bankruptcy. debtors, in 2016 over 4.4 thousand people, and in 2017 more than 5.5 thousand. people. In January 2018, 478 advertisements regarding the bankruptcy of natural persons were registered in ” Court and Economic Monitor”. This is almost 30% more than in the same month of the previous year.
Weaknesses of the current law
In 2017, the Ministry of Justice announced further changes to the Insolvency Act, which would facilitate the insolvency of insolvent consumers. In the current form of the Act, there were many shortcomings that resulted, among others, in Court overloads with the number of cases examined, insufficient cooperation of courts with entities involved in bankruptcy proceedings, problems with the liquidation of bankruptcy assets or difficulties with establishing a list of claims. Another problem is the different approach of the courts to individual provisions. And so in some cities the declaration of bankruptcy is not possible at all, because the courts are afraid to consider this type of case. It happens that debtors, for fear of dismissal of the application by a court in their hometown, file an application away from their place of residence.
What will change?
The amendment to the Act aims to liberalize bankruptcy proceedings and includes:
- Permission to declare bankruptcy even to those debtors who acted “grossly negligent” and even deliberately led to their insolvency. In return, the legislator envisages introducing a longer repayment period, ranging from 4 to 8 years.
- Liquidation of the ruthless premises for the declaration of bankruptcy – as a result, bankruptcy will be declared by anyone who can prove that there are considerations of fairness or humanitarian considerations in relation to him. The debtor will only have to prove that he is insolvent.
- Significant acceleration of proceedings for those who have no assets – this is connected with the restoration of the institution of the temporary court supervisor, who will check whether the debtor actually has no assets and whether he did not act to the detriment of the creditors. If he confirms this information, the court will declare bankruptcy in one proceeding and at the same time redeem the debtor’s debts without setting a repayment plan.
Changes favorable for microentrepreneurs
The legislator also looked at the persons who run sole proprietorships, rightly separating them from large enterprises with several million turnover. The bankruptcy of micro-entrepreneurs will be similar to consumer bankruptcy, eg thanks to the possibility of declaring bankruptcy without fixing a repayment plan or obtaining a possibility to receive rent for protection against homelessness.
Agreement with creditors
The new bill also introduces the possibility of concluding an agreement with creditors. Currently, such an agreement is possible only as part of bankruptcy proceedings. In theory, because in practice the recipe does not exist. After the amendment, the debtor will have the chance to agree with the creditor even without the need to apply for bankruptcy in advance. For this purpose, he will have to turn to a restructuring advisor. If the court finds that the borrower has a chance to communicate with the creditors, he will be able to postpone the recognition of the bankruptcy petition (up to 4 months). He will start the bankruptcy procedure when the agreement fails.