Upcoming Amendments to the Insolvency Act

Shortening the Debt Relief Period to 3 Years

Elimination of the Legal Presumption of Debt Relief Fulfillment

Another key change is the elimination of the presumption of debt relief fulfillment when unsecured creditors are satisfied to the extent of at least 30% of their claims. Instead, an individual assessment of each case will be applied, taking into account the financial situation of the debtor and their ability and potential to repay their obligations.[3]The amount necessary for discharge will no longer have a fixed threshold.

Debtor's Reporting Obligation

Instead of the current 6 months, debtors will now be required to inform the insolvency court of their income every 3 months[4]and cooperate with the insolvency administrator in the liquidation of assets that are part of the insolvency estate.[5]The court will also newly consider whether the debtor is rejecting better job opportunities and property benefits or undertaking unreasonable financial risks. If a debtor fails to register as a job seeker within 15 days of losing employment, the law introduces a rebuttable presumption that the debtor is not fulfilling their obligation to seek income[6].

Possibility of Repaying Debts from Non-Seizable Amount

The law will newly allow debtors seeking debt relief through a repayment plan with asset liquidation to repay their debts to creditors from the non-seizable portion of their income. Such repayment will require a written declaration from the debtor, stating that this method will not endanger the satisfaction of their basic needs or the needs of dependents.[7]

Other Changes

• The period during which it is not possible to re-enter debt relief is extended from 10 to 12 years.[8]
• A new obligation is introduced for debtors' employers and credit providers to cooperate with the insolvency administrator and provide the necessary documents.[9]
• The period for removing a debtor discharged by the insolvency court from the insolvency register is shortened from 5 years to 3 years.[10]
• The insolvency court is given the option to extend the duration of debt relief by up to 12 months in case of significant breaches of the debtor's obligations.[11]
• A new central registry of wage garnishments is introduced, recording those related to execution through wage and other income deductions.[12]

Application of the Amendment Only to New Proceedings

It is important to note that this amendment will only apply to new insolvency proceedings initiated after its entry into force. Existing cases will continue to be assessed under the old rules, ensuring legal certainty and stability for all parties involved.

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[1] The approved law was sent for publication in the Collection of Laws on August 8, 2024.
[2] See § 412a paragraph 1 letter b) of the Insolvency Act (as amended by the novel).
[3] See § 412a paragraph 1 letter b) in connection with § 412 paragraph 4 of the Insolvency Act (as amended by the novel).
[4] See § 412 paragraph 1 letter d) of the Insolvency Act (as amended by the novel).
[5] See § 412 paragraph 2 of the Insolvency Act (as amended by the novel).
[6] See § 412 paragraph 4 of the Insolvency Act (as amended by the novel).
[7] See § 391 paragraph 3 in connection with § 409 paragraph 1 of the Insolvency Act (as amended by the novel).
[8] See § 395 paragraph 3 of the Insolvency Act (as amended by the novel).
[9] See § 43 paragraph 1 of the Insolvency Act (as amended by the novel).
[10] See § 425 paragraph 2 of the Insolvency Act (as amended by the novel).
[11] See § 412b paragraph 6 of the Insolvency Act (as amended by the novel).
[12] See § 125b of the Insolvency Act (as amended by the novel).