A credit insolvency occurs when the debtor can no longer meet the demands for payment to his creditors. In the context of a bankruptcy there are 2 different forms:
1. The corporate insolvency
2. Private and Consumer Bankruptcy
Private insolvency is anchored in the Insolvency Code (InsO)
In private insolvency proceedings, officially referred to as consumer bankruptcy, an attempt is first made to conclude with the previous creditors such as lenders and telephone providers to settle the debt amicably. In this case, a number of 20 existing creditors may not be exceeded. If this does not succeed, an agreement can be reached through a court case.
Debt settlement plan
If only one of the creditors does not agree to the debt settlement plan and no agreement can be reached on the court, the court will designate a trustee. This initiates the insolvency proceedings with subsequent discharge of residual debt . It also has the task of utilizing remaining goods of the insolvent debtor concerned in order to settle primarily the procedural and legal costs. Only then are the creditors proportionally served. From the income of the debtor, the attachable part is used to pay off existing debts.
Exemption from residual debt
Since 1999, there has been the possibility of exemption from residual debt following the conclusion of insolvency. However, this can only be initiated if the debtor has not yet been convicted of a bankruptcy offense. He must not have made false statements regarding the insolvency and did not violate any information or reporting obligations during the proceedings. During this discharge of residual debt, the debtor can discharge himself completely through a good conduct period of 6 years. During this time, he should pursue regular employment or actively seek a new job when unemployed.
A fortune, which the debtor receives by inheritance law inheriting, goes half to the trustee, who serves thereby the remaining creditors. More about collateral transfer and credit special repayment