The new regulations are part of the government’s economic stimulus and crisis management package. With a view to the economic consequences of the coronavirus pandemic in particular, honest debtors are to be given the chance to make a new start more swiftly. The new provisions also implement the EU directive on restructuring and insolvency for the field of debt relief.
As has been the case hitherto, debtors are required to comply with extensive disclosure and cooperation obligations before residual debt can be discharged. They are, for instance, required to be gainfully employed or endeavour to become gainfully employed. There can be no known reason to refuse to discharge residual debt and no such grounds can be invoked by creditors. Only honest debtors are to see their residual debt discharged. This can be refused if the debtor incurs "inappropriate liabilities" with intent or due to gross negligence during the good conduct period.
The discharge of residual debt allows debtors to be liberated from obligations not performed vis à vis their creditors under certain circumstances. This is designed to give them the chance to make a new economic start.
Here are the new provisions in detail:
The new provisions are based on experience to date with company and consumer insolvency: To date, in the vast majority of cases, creditors have been able to expect significant settlements in the case of an insolvent company where a three-year residual debt discharge procedure has been conducted.
In the case of consumer insolvency, insolvency claims are not generally settled even with a regular six-year residual debt discharge procedure. Unforeseeable events that plunge individuals into debt through no fault of their own (ill health, divorce, unemployment) are the main causes of excessive consumer debt. They cannot generally be managed by changing the duration of the residual debt discharge procedure.