A precarious financial situation is usually the reason people file for bankruptcy. Many different factors can lead to it. Debt, unemployment, long-term illness: any of these can be a cause. As a last resort in situations like these, the legislature has created the option for debtors to file for bankruptcy.

Looks hopeless - or does it?

Everyone has heard of this scenario, but few people can really picture what it involves. What exactly lies ahead for someone who wants to file for bankruptcy? Many are put off by the word alone and avoid filing. Others are ashamed and simply live with the mountain of debt. It is important to know that filing for bankruptcy is not grounds for dismissal, as people often wrongly assume. But there are several other factors to keep in mind when it comes to the term bankruptcy.

Things to watch out for

It makes good sense to consult a debt counselor. They are specialists and can provide valuable help in this complex situation. Depending on the circumstances, the debt counselor will usually aim for a consumer insolvency arrangement. This would result in an out-of-court settlement. Bankruptcy proceedings would then not take place, because the creditors would waive part of their claims.
Pay attention to the timeline, too. The process will not be completed within a few weeks or months. As a rule, it takes around six years (under German law).
In general, a list is drawn up of all the assets the debtor owns. This includes condominiums, cars and so on. These can be sold, so that part of the debt can be repaid, for example. In addition, the court can claim the garnishable portion of the debtor's income. There is, however, a legally defined garnishment exemption threshold, which is also partly determined by personal circumstances such as children or marital status. Child support payments are also taken into account.
Every creditor is asked to submit a table. It contains a statement of claims listing the debts. If no agreement is reached before the proceedings, these claims are registered in the insolvency table and, depending on how they are registered and on land register entries, receive a particular ranking.
Loans, installment payments and major purchases are not possible during the proceedings. Every lender can check the Schufa (Germany's credit bureau), and a bankruptcy filing is recorded there. You can only live on the non-garnishable part of your income. It is also important to know that the entry is not deleted immediately once the proceedings have ended!
The discharge of remaining debts (Restschuldbefreiung) is a ray of hope. It means that once the proceedings are over, the debtor is released from the remaining debts. They are forgiven on a legal basis. That lays the foundation for a financial fresh start. Filing for bankruptcy is a rocky road, but it is worth taking.

or does it?
Everyone has heard of this scenario, but few people can really picture what it involves. What exactly lies ahead for someone who wants to file for bankruptcy? Many are put off by the word alone and avoid filing. Others are ashamed and simply live with the mountain of debt. It is important to know that filing for bankruptcy is not grounds for dismissal, as people often wrongly assume. But there are several other factors to keep in mind when it comes to the term bankruptcy.

Filing for bankruptcy
Filing for bankruptcy



Things to watch out for
It makes good sense to consult a debt counselor. They are specialists and can provide valuable help in this complex situation. Depending on the circumstances, the debt counselor will usually aim for a consumer insolvency arrangement. This would result in an out-of-court settlement. Bankruptcy proceedings would then not take place, because the creditors would waive part of their claims.
Pay attention to the timeline, too. The process will not be completed within a few weeks or months. As a rule, it takes around six years (under German law).
In general, a list is drawn up of all the assets the debtor owns. This includes condominiums, cars and so on. These can be sold, so that part of the debt can be repaid, for example. In addition, the court can claim the garnishable portion of the debtor's income. There is, however, a legally defined garnishment exemption threshold, which is also partly determined by personal circumstances such as children or marital status. Child support payments are also taken into account.
Every creditor is asked to submit a table. It contains a statement of claims listing the debts. If no agreement is reached before the proceedings, these claims are registered in the insolvency table and, depending on how they are registered and on land register entries, receive a particular ranking.
Loans, installment payments and major purchases are not possible during the proceedings. Every lender can check the Schufa (Germany's credit bureau), and a bankruptcy filing is recorded there. You can only live on the non-garnishable part of your income. It is also important to know that the entry is not deleted immediately once the proceedings have ended!
The discharge of remaining debts (Restschuldbefreiung) is a ray of hope. It means that once the proceedings are over, the debtor is released from the remaining debts. They are forgiven on a legal basis. That lays the foundation for a financial fresh start. Filing for bankruptcy is a rocky road, but it is worth taking.