Private insolvency helps people to get out of debt. This is taken care of by the discharge of residual debt, which ends the proceedings. But before this happens, debtors must first get through the conduct of business phase, among other things. We explain how long this lasts and what obligations you have during it.
FAQ: Good conduct phase in private insolvency
What is the good conduct phase in private insolvency??
In private insolvency, the good conduct phase is the period that lies between the judicial insolvency proceedings and the discharge of residual debt. During this period, you must, among other things, give part of one of your incomes to the insolvency administrator, who then distributes the money to the creditors.
How long does it take to reach the good conduct phase?
Before the good conduct phase can begin as part of personal insolvency, you must first go through an out-of-court debt settlement process as well as the court insolvency process. Depending on the individual case, this usually takes a few weeks to a few months.
What changes in the good conduct phase?
During the period of good conduct, you must transfer the attachable portion of your income to the insolvency administrator. You also have many other obligations. This includes, among other things, that you have to pursue a professional activity. You can read more about your obligations here.
What do I have to bear in mind during the conduct of business phase??
Among other things, you are obliged to report a move or a change of job immediately. If you receive an inheritance in the course of the private insolvency during the period of good conduct, you must hand over half of it to the insolvency administrator. If you do not adhere to this and other rules, you risk being denied residual debt discharge.
Longest stage in the insolvency process: The conduct of business phase
Private insolvency follows a set sequence of events with distinct stages. One of these is the so-called good conduct phase. It represents the longest period in the private insolvency process and is characterized mainly by the fact that during it debtors must cede the attachable part of their income to the insolvency administrator.
Am I allowed to start my own business during the period of good conduct?? Yes, it is possible. However, it is important to note that you must give the insolvency administrator as much of your income as if you were working in a reasonable, non-self-employed job.
How long does the period of good conduct last??
When does the good conduct phase begin and how long does it last?? This is a question asked by many people who are at the beginning of the private insolvency process. Basically, the period of good conduct begins when the insolvency is officially opened by the insolvency court.
The duration of the good conduct period is three years, if you start the procedure from 1. October 2020 have filed. However, it is extended to five years if you have already been granted a discharge of residual debt in the past, and this first procedure from 1. October 2020 was applied for.
However, it is also possible to get a reduction in the good conduct period during personal insolvency. To do this, the following conditions must be met:
- They have settled the procedural costs and other debts of the estate; and
- You have fulfilled the claims filed or no creditor has filed a claim.
Taking out a loan during the good conduct phase is not prohibited per se, but practical reasons usually make this impossible. Private insolvency in fact ensures a poor credit rating, which is an exclusion criterion for banks when granting loans.
Attention: different rules for older insolvency proceedings!
Have your insolvency proceedings completed by 30. Filed September 2020, but different rules apply regarding the length of time set for the good conduct phase. Here, insolvency usually does not end for up to six years.
However, even here, abbreviation is possible:
- The good conduct period only lasts five years if you have paid off the full costs of the proceedings.
- The procedure ends after three years if you have paid both the procedural costs and 35 percent of the claim amount.
- The insolvency proceedings can be terminated at any time if you have repaid the costs of the proceedings and you have paid off all claims or no creditor has filed a claim.
Your obligations during the period of good conduct
During the good conduct period, you must abide by some important rule. Among other things, as we have already mentioned, this means that you must cede the attachable portion of your income to the insolvency administrator.
The following rules must also be observed:
- You must report a move or change of job immediately.
- You must have a decent job or, if unemployed, have a proven record of trying to find a new job.
- If you inherit during the good conduct phase, you must assign half of the sum to the insolvency administrator.
- Taking on new debts during the period of good conduct can have negative consequences if you do so knowing that you will not be able to pay the outstanding debts.
If you do not fulfill your obligations, creditors can apply for the denial of residual debt discharge. This would make the process fail.
Many debtors ask themselves in terms of private insolvency: What happens after the period of good conduct? If you have complied with all the rules, you will be discharged from residual debt. You are thus freed from (almost) all outstanding debts. However, there are exceptions for fines or penalties, among other things. These can still be claimed.