Press "Enter" to skip to content

Comparing European Personal Bankruptcy Laws

Unravel the complex world of personal bankruptcy and explore how it varies in its implementation across different European countries. Learn about how processes diverge, from Germany’s stringent rules to the simplicity of filing in Ireland or Latvia. This article aims to be an indispensable guide, providing a snapshot of each country’s approach and detailing the pros and cons of filing bankruptcy there.

Germany: The Rigorous Road to Relief

In Germany, personal bankruptcy is a complex process that begins with an attempt to negotiate out-of-court agreements with creditors through a debt settlement plan. If any creditor rejects this plan, a bankruptcy application must be filed. Once bankruptcy is declared, out-of-court agreements are attempted again, requiring at least 50% of creditors to agree to the plan. Following this, there’s a three-year period of good behavior where a trustee manages the debtor’s assets and distributes the bankruptcy estate among the creditors. During this period, the debtor must work or seek employment and any changes in their professional or residential situation must be immediately communicated to the trustee and the bankruptcy court.


Ireland: A Swift Path to Solvency

On the other end of the spectrum, Ireland’s private insolvency process stands out for its speed and simplicity. Debts are typically discharged within a year, and there are minimal obligations during this ‘good behavior’ phase. However, certain drawbacks such as the sequestration of future pension or retirement claims in some cases and the inability to run an Irish limited company may deter some individuals. More about Ireland’s insolvency laws can be found here.

Dublin, Ireland
Dublin, Ireland

Latvia: Balancing Flexibility and Obligations

The insolvency process in Latvia offers more flexibility, with the discharge of debt ranging from 12 to 36 months depending on the debtor’s ability to repay. The proportion of income to be surrendered is a considerable 33.33%, and the debtor must generate income to satisfy creditors, among other obligations. Despite these responsibilities, there are advantages like the possibility of an immediate debt discharge and the cessation of interest accrual upon declaring bankruptcy.

Riga, Latvia

Spain and Portugal: The Iberian Approach

Spain and Portugal share similarities in their bankruptcy laws, with an approximate timeline of 12 to 16 months and 3 to 5 years for debt discharge respectively. In both nations, there’s an emphasis on the debtor’s responsibility and compliance with a debt settlement plan. Notably, Spain introduces a ‘fault’ concept where the debtor could face criminal prosecution if the bankruptcy is deemed culpable. Spain’s bankruptcy law provides more context.

Madrid, Spain

Eastern EU: Bulgaria, Czech Republic, and Romania

Bankruptcy procedures in Eastern part of the European Union, specifically in Bulgaria, Czech Republic, and Romania, generally span from 2 to 5 years. While sharing a common theme of individual calculation for income contribution and regular reporting on financial situations, they each offer different advantages like potentially shortened bankruptcy periods and lower living costs. Some may face potential challenges such as language barriers and the need to adapt to local culture.

Remember, this article serves as an informational guide and not as legal advice. It's always recommended to consult with a financial advisor or legal expert before making any significant decisions related to bankruptcy.