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about us
personal bankruptcy
our services
blog
contact

PL
DE
EN

Menu

PL
DE
EN

+48 534 22 88 22 (PL/DE) | +48 533 45 94 84 (PL/EN)
biuro@upadloscgdansk.com
Chmielna 71/76 80-748 Gdańsk

about us
personal bankruptcy
our services
blog
contact

Menu

about us
personal bankruptcy
our services
blog
contact

personal bankruptcy

The institution of personal bankruptcy is designed to counteract the negative and growing social phenomenon of excessive debt among individuals. Its purpose is to enable debt relief for those individuals who are so indebted that they cannot repay their debts independently. This aims to reduce social exclusion by allowing debtors to re-enter legal economic activity and, in the long term, to utilize financial services again.

Ruling of the District Court in Szczecin – VIII Economic Division on March 6, 2017, VIII Gz 31/17

Personal bankruptcy is a legal procedure intended for individuals not engaged in business activities, which allows for the reduction or complete cancellation of debts while protecting the legitimate interests of creditors. Introduced in Poland in 2009 and systematically liberalized, it provides a chance for a fresh financial start, especially for those who have found themselves in difficult situations through no fault of their own. Personal bankruptcy aims to reduce social exclusion by enabling debtors to regain financial stability and participate in legal economic activities.

To benefit from this form of debt relief, it is necessary to submit an application to the district court, which decides on the declaration of bankruptcy. Amendments to the bankruptcy law, particularly those from 2014 and 2020, have significantly facilitated access to the personal bankruptcy procedure by lowering legal and financial barriers. These changes include simplifying application forms and reducing court fees, making bankruptcy proceedings more accessible and debtor-friendly.

The bankruptcy procedure begins with the declaration of the debtor’s entire assets, with the possibility of excluding from the bankruptcy estate those assets necessary for the basic functioning of the debtor and their family. The court then, based on the gathered data, establishes a repayment plan for creditors, which can last up to 36 months, and in exceptional cases, even up to 7 years.

An important element is the possibility of complete discharge of remaining debts after the repayment plan is executed, giving the debtor a chance for full debt relief and a return to normal functioning in society. Certain obligations, such as alimony or fines, are not subject to discharge.

Our law firm specializes in advising and handling personal bankruptcy cases. With our experience and expertise, we can effectively support our clients at every stage of the bankruptcy process. If you are struggling with insolvency and seeking professional legal assistance, please contact us. We help restore financial stability and offer a chance for a new start without debt.

How the Personal Bankruptcy Process Works

Personal bankruptcy is a legal procedure available to individuals who are not engaged in business activities and find themselves unable to repay their debts to creditors. This procedure aims to allow the debtor to free themselves from debt through partial repayment or cancellation, thereby enabling a “new financial life.” Personal bankruptcy is regulated by the “Bankruptcy Law” and can be divided into the following stages:

1

Application for Bankruptcy Declaration (Art. 491(2) of the Bankruptcy Law)

The debtor (or in exceptional cases, the creditor) may file an application for personal bankruptcy. The application must include detailed information about the debtor, their assets, creditors, and their financial situation.

2

Bankruptcy Declaration Order (Art. 491(5) of the Bankruptcy Law)

The court reviews the application and may issue an order declaring bankruptcy. In the order, the court calls on creditors to submit their claims and third parties to declare any rights to the bankrupt’s assets.

3

Appointment of a Trustee (Art. 491(5) Section 1 Point 5 of the Bankruptcy Law)

In the bankruptcy declaration order, the court appoints a trustee who takes over the management of the bankrupt’s assets. The trustee’s task is to inventory the assets and prepare a repayment plan for the creditors.

4

Submitting Claims (Art. 491(5) Section 1 Point 3 of the Bankruptcy Law)

Creditors submit their claims to the trustee within the timeframe specified by the court, using the electronic system that supports court proceedings (KRZ). The trustee verifies the submitted claims and prepares a list of recognized claims.

5

Asset Liquidation (Art. 491(11a) of the Bankruptcy Law)

The trustee proceeds to liquidate the bankrupt’s assets, which may include selling assets. This process aims to obtain funds necessary to satisfy creditors’ claims.

6

Repayment Plan for Creditors (Art. 491(14) of the Bankruptcy Law)

After completing the asset liquidation, the trustee presents the court with a repayment plan for creditors. The plan must be justified and include information on the collected funds and the proposed distribution among creditors. The court can approve the plan, request modifications, or reject the plan if it does not meet legal criteria. At this stage, a hearing may be conducted if requested by the bankrupt, trustee, or creditor. The repayment plan can be set for up to 36 months, and in exceptional cases, up to 7 years.

7

Implementation of the Repayment Plan (Art. 491(18) Section 1-3 of the Bankruptcy Law)

The debtor independently makes repayments according to the approved repayment plan. The bankrupt is required to submit an annual report on the execution of the repayment plan to the court by the end of April each year. During this period, the bankrupt cannot undertake legal actions concerning their assets that could worsen their ability to fulfill the repayment plan.

8

Debt Cancellation (Art. 491(16) of the Bankruptcy Law)

The court may cancel the bankrupt’s debts if their personal situation clearly indicates a permanent inability to repay, guided by principles of fairness and humanity. If funds are collected in the bankruptcy estate, the court establishes a repayment plan for creditors.

9

Final termination of the Proceedings (Art. 491(21) of the Bankruptcy Law)

After the bankrupt fulfills the obligations specified in the repayment plan, the court issues an order confirming the completion of the repayment plan and cancels the bankrupt’s pre-bankruptcy debts that were not settled through the repayment plan.

10

Rebuilding the Debtor’s Creditworthiness

After the bankruptcy proceedings are concluded, the debtor has the opportunity to gradually rebuild their creditworthiness and financial stability, which is the primary goal of personal bankruptcy.

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When Can You Declare Personal Bankruptcy?

When considering declaring personal bankruptcy, it is crucial to understand the prerequisites that must be met for the court to initiate bankruptcy proceedings. This process is designed to provide support to individuals who find themselves in a difficult financial situation, unable to meet their obligations. To understand who can benefit from personal bankruptcy, it is important to look at the essential prerequisites for declaring bankruptcy:

Eligible Applicant (Art. 491(2))

Insolvency of the Debtor (Art. 491(2))

Completion and Submission of the Bankruptcy Application

Status as a Non-Business Individual. At the time of filing for personal bankruptcy, the applicant must be an individual who is not engaged in business activities. This means the procedure is available only to consumers, not to entrepreneurs.

The primary condition for declaring personal bankruptcy is the insolvency of the debtor. Insolvency is understood as a state in which the debtor is unable to meet their due financial obligations. It is presumed that the debtor has lost the ability to fulfill their due monetary obligations if the delay in fulfilling these obligations exceeds three months. Insolvency must be permanent, meaning that the debtor is unable to cover their debts in the foreseeable future.

The bankruptcy application must contain detailed information about the debtor’s financial situation, including an inventory of assets, a list of creditors, information on income and expenses, and other necessary data to assess the debtor’s financial condition.

If you are wondering whether your situation qualifies for declaring personal bankruptcy, our law firm is ready to provide professional support. We assist in evaluating your legal and financial situation, preparing and submitting the bankruptcy application, and representing you in court.

Contact us to schedule a consultation and find out how we can help you find a way out of a difficult financial situation.

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