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Bankruptcy & Debt Law in Berlin, and generally in Germany, is designed to protect both the creditors and the debtor. In the event of insolvency, the law sets out provisions to ensure that creditors can recover as much of their investment as possible, while debtors are not left completely destitute. There is a structured, legal process for declaring both individual and business bankruptcy.
Though bankruptcy and debt law is designed to protect all parties involved, the actual process of navigating these laws can be complex. You may need a lawyer if you are unable to repay your debts and need to file for bankruptcy, if you are a business owner trying to recover debts, or if you are a consumer trying to understand your rights and responsibilities under the law. A lawyer can provide advice, representation, and assistance in these matters.
Under German law, there are two main types of personal bankruptcy: consumer insolvency and regular insolvency. The consumer insolvency is applicable if you have no commercial debts while the regular insolvency covers both commercial and non-commercial debts. A key aspect of local law is that debtors need to go through a 'good conduct phase', a six-year-period wherein they must demonstrate sincere efforts to repay their debts before they can be discharged. For businesses, the law offers provisions for reorganisation and continuation instead of immediate liquidation in certain cases.
No, not all debts can be cleared through bankruptcy. Certain kinds of debts like fines, student loans or damage claims arising from intentional torts cannot be cleared.
Typically, the insolvency process can take anywhere from one to several years, plus the "good conduct phase", which lasts six years.
Any individual residing in Berlin and is unable to repay their debts is eligible for personal bankruptcy. However, they need to undergo debt counselling first.
Declaring bankruptcy will have a negative impact on your credit rating. However, the negative effect lessens over time, especially if you demonstrate responsible financial behaviour during the "good conduct phase".
In most cases, a debtor’s home or personal residence may be exempt from being sold off to repay the debt. However, the rules can vary depending on the specific circumstances.
There are several resources available for people in need of legal advice on bankruptcy & debt in Berlin. These include:
If you need legal assistance, it's advisable to start by contacting a legal advisor or lawyer specializing in bankruptcy and debt law. Make sure to assemble all relevant financial documentation, including lists of assets, debts, and monthly expenses. Remember to fully disclose your financial situation to your lawyer. They can provide you with the best advice and representation when they have a complete picture of your situation.
