COVID-19 Pushes Many to Insolvency: Here's the Process and Potential Relief
In the wake of the COVID-19 pandemic, many individuals have found themselves struggling to meet their financial obligations, leading some to explore insolvency as a solution. Let's delve into the process, from initial settlement attempts to potential debt relief.
The journey towards insolvency begins with an out-of-court settlement, where debtors and creditors attempt to reach an agreement. If this fails, an application is submitted to the court for another settlement attempt. If both attempts prove unsuccessful, the insolvency procedure commences.
During this process, the court appoints an Insolvenzverwalter, who takes over the management of the insolvent company's assets and affairs, or a Sachwalter in cases of self-administration. The administrator realizes the debtor's assets, creating an 'insolvency estate' to distribute among creditors.
Following the insolvency procedure, the debtor enters a 'period of good conduct', during which they are not allowed to incur new debts. At the end of this period, debt relief can be granted, invalidating all outstanding claims.
The insolvency process, triggered by the pandemic for many, involves initial settlement attempts, followed by an insolvency procedure if necessary. After a 'period of good conduct', debt relief may be granted, providing a fresh start for those who qualify.
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