When should I request an early decision?

Early discharge of residual debt in the event of personal bankruptcy

The most important thing on the subject of "early granting of residual debt relief"

When and under what conditions do I get early debt relief?

At what point in time and under what conditions you will be released from your debts early, you can find out here.

What else do I have to do for an early discharge of the remaining debt?

Debtors must submit an application to the competent bankruptcy court for early release of residual debt.

Consumers who have applied for personal bankruptcy from October 1st, 2020 only have to go through a three-year procedure until the remaining debt is discharged. With this change in law, the EU directive on restructuring and insolvency was implemented. You can read more information on shortening the residual debt discharge procedure from six to three years in our guide Debt discharge.

When is it possible to grant discharge of residual debt early?

The aim of private insolvency proceedings is to discharge the person concerned. The The process of private bankruptcy is strictly regulated:

  1. Attempt to settle debts out of court
  2. Registration of personal bankruptcy
  3. Judicial settlement attempt
  4. Insolvency proceedings are opened and the bankruptcy estate is realized
  5. Conduct phase
  6. Debt discharge

As a rule, the conduct of business phase lasts six years from the date the bankruptcy proceedings are opened. Then the release from the outstanding debts takes place. However, under certain circumstances there is one early discharge of remaining debts possible.

The legal basis for this is provided by Section 300 (1) InsO. The early discharge of the remaining debt is possible under the following conditions:

  • At any time: If the debtor has paid the procedural costs and no creditor has registered a claim or all of the creditors' claims have been satisfied and the other mass liabilities have also been adjusted.
  • After three years: When both the procedural costs and 35 percent of the outstanding debt have been paid.
  • After five years: When the debtor has at least paid the legal costs.

Often the early discharge of residual debt is achieved by a unexpected inheritance possible. However, there is also the possibility that, for example Relatives or friends can raise the money they need and thus pay the procedural costs.

The early granting of the remaining debt discharge however, it does not take place automatically. Rather, debtors must have one submit a corresponding application to the bankruptcy court, which will be decided afterwards. We explain in the following section what needs to be taken into account.

How can bankruptcy debtors apply for early discharge of residual debt?

An application must be submitted for early discharge of the remaining debt. If you have met the necessary requirements, debtors have to take action themselves - Neither the court nor the insolvency administrator check in the insolvency proceedings whether the relevant payments have already been made.

The corresponding Debtors receive forms for the application at the competent bankruptcy court. It is important that persons get the early discharge of residual debt have to apply at the right time.

If the conduct of business phase of private insolvency is to be shortened to three or five years, the application may will only be made when the corresponding sum of the procedural costs and - if necessary - part of the outstanding claims were actually repaid.

From ยง 300 InsO it is clear that the debtor the Must have already corrected the costs of the proceedingsso that the early discharge of the remaining debt can be applied for. Hence it is to refrain from submitting a corresponding application in advance - even if it is to be expected that the necessary sums will be paid off in the foreseeable future.

If debtors do not have the necessary assets to pay the procedural costs, they must Apply for a deferral of these costs - Otherwise the insolvency proceedings will not be opened in the first place. In this context, the following should be noted: If there are no outstanding debts or bankruptcy claims, the Premature discharge of remaining debts is not possible if a deferral of procedural costs has been granted beforehand. The costs must actually have been paid.

What happens after debtors submit the application?

According to Section 300, Paragraph 1 of the InsO, the court will only decide on the early granting of the residual debt if a Hearing the following three parties has taken place:

  1. creditor
  2. Insolvency administrator or trustee
  3. debtor

It is important that the application is only successful if the Debtor can demonstrate to the court and make credible that he meets the relevant requirements for early discharge of residual debt. So he has to prove that he has already paid procedural costs and the like.

In this context, one point must be particularly observed: Should the private insolvency be shortened to three years, the debtor must provide information about the origin of the funds that have been paid to the liquidator or trustee and in excess of the amounts covered by the assignment statement. It is regulated in Section 300 (2) InsO. If the corresponding sums were raised by a relative, for example, so this must be communicated to the court.
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Early discharge of residual debt in the event of personal bankruptcy
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