In case the legal persons have benefited from the bankruptcy procedure in order to save the economic situation, it can be considered that the adoption of the personal bankruptcy law is an equivalent and beneficial measure for individuals. The year 2018 did not just bring you the chance to get a quick online credit without 24/7 papers , but also to declare yourself bankrupt. The initiative is an older one, proof of which is Law 151/2015, but it was only at the beginning of this year that it came into force. How useful is the bankruptcy law for those who are bad-payers and how can such a law help them? Is bankruptcy the best solution for those who have not paid their loans and bad loans? Should such a law work in favor of such people?
The Law of Personal Bankruptcy, the law that seeks to protect those with a delicate financial situation!
Many people have accessed credits that have proven to be too difficult to repay, as interest rates have risen sharply lately. Some of those addressing the personal bankruptcy law are those who have bank loan contracts in the pre-crisis period of 2009 when property prices in Romania have reached fantastic odds.
The famous Swiss franc loans date back to that period and have “succeeded” in determining the adoption of this law. The value of variable interest rates and unpredictable currency fluctuations have led to truly dramatic situations for debtors who have had to resort to all sorts of sacrifices to pay their loans.
Here’s how the law works for such a person who is in an unsatisfactory financial situation and who is contracting a loan that he can not repay under the money-retention chart:
- The insolvency procedure of the person must be triggered – it becomes valid when there is a delay in the payment of the debts assumed under a credit agreement for more than 90 days. The procedure can only be triggered if the declarant’s financial situation is such as to justify this procedure, ie the person does not have funds to pay the monthly loan installment.
- Bankruptcy will be declared administratively or in court (this means that a person in insolvency will apply to the Insolvency Commission or court, which will analyze the financial statement and all annexed documents, and if the conditions specified by the then the bankruptcy procedure will be started, depending on the financial level of the applicant.
- Procedure for organizing the insolvent – from the time of bankruptcy, the person concerned will be offered three ways to solve financial problems (debt-based, simplified and asset-liquidation).
The law is still inadequate in certain aspects, given that the basis on which it was built is that of the bankruptcy law of legal persons. However, it is welcome, given that more and more Romanians are in a worse financial situation due to these loans, which proved to be not good for banks, but especially for them.
Is the law on bankruptcy and bad-payers addressed?
This law is designed for bona fide borrowers who, for various reasons, have failed to support their debt payments. It is not just about the ones due for loans, but also about those related to the failure to pay invoices to suppliers and any other kind of inability to pay a willingly assumed debt. Bad-payers can be considered to be those who voluntarily take the delay, so they do not pay their debts because they want it, not because they do not have the necessary amounts. However, even if they have a delay of 90 days of non-payment of debts, they may request the opening of insolvency proceedings.
Of course, by verifying the financial situation, a clear conclusion can be reached regarding the person of good faith and the bad faith. The legislator also provided for a few cases where a person requesting personal bankruptcy can not be assimilated to a person in good faith, such as persons who have been convicted of various crimes, have committed acts by which they have deliberately consented to diminish the patrimony thus so that they are in such a state of financial failure or who have shown total disinterest to find a source of income to cover their overdue debts.
How much can your bankruptcy law save you?
The law provides for the initiation of one of the three types of bankruptcy proceedings (through redirection, simplified form and asset liquidation). Each of these procedures involves a certain degree of fact for the applicant, so the choice will depend on the financial situation of the applicant. In case of a recovery by more efficient management of the finances and the repayment of the debts, the person will receive the assistance of an administrator for a period of 5 years, with the possibility of extending for another year. This will help streamline revenue and how to spend it by setting a debt repayment plan to the debtor.
The asset winding-up procedure will allow the debtor to release the debt by liquidating some of the assets at his disposal. Throughout the procedure, he will be forbidden to use the goods in question. In the case of the last type of procedure, the one in simplified form, it proves to be more beneficial for it, because it will be declared directly by the court.
Certainly the bankruptcy law will help those who need support in order to repay their accumulated debts. It will also be useful to those who are bad-payers and who have come to the credit bureau’s records. But even if it is advantageous, it is certain that it could be avoided if the lending institutions had an understanding of the debtors and would have helped them with a reorganization of outstanding debts. In this way, the procedures will involve the assumption of costs (financial and time) for all parties involved in the proceeding, the results being, as time may prove to be, far from what is initially desired!