Insolvency or distrainment loan. Is it even possible?
Failure to repay loans with banks and private creditors, rent debts, social security and health insurance, loss-making business – all (and of course many other situations) may result in execution or insolvency proceedings. How are these processes going and can somehow escape from them?
The execution can reach you very unexpectedly
Let’s first look at the distraint, which is a big scarecrow for perhaps anyone who knows that he has some financial debts, outstanding debts and obligations and the like. As has been said, it may not only be debts in the form of non-performing loans, but also debts, for example, on rent, alimony, payments for electricity or other energy, and the like.
The process itself begins, of course, with the creditor’s decision that his patience is over. The time left to do so is logically different for different types of lenders. Private lenders may start to get your debt in a hurdle very quickly – some lenders may be patient with the borrower for several years.
Therefore, when a creditor decides, he needs a distrainment title that stipulates the debtor’s obligation to repay the obligation (such as a court decision, etc.). Thereafter, the creditor submits a petition for execution order. The enforcement procedure is already commencing on the date of filing this petition. Within 15 days of filing the petition, the bailiff must address the court and ask for a distraint order – the court has 15 days to settle it. The bailiff has another 15 days to deliver the decision to the debtor.
From that moment on, the debtor may no longer dispose of his or her assets (except for the satisfaction of basic necessities of life, property management, normal business and operational activities, etc.) and has 30 days to pay the outstanding amount. After the expiry of the deadline, the execution itself begins.
What are the different forms of execution?
- Execution for salary and bank account – is one of the most popular solutions, as it is easy for the executor himself. It is sufficient to prove the execution order to the bank or employer.
- Foreclosure on real estate – the real estate is blocked in the cadastre and may end up by auction.
- Execution for pension, social benefits, etc.
- Execution of movable property
How is it possible to resist execution?
Is it possible to resist execution? The best way is to settle all debts no later than 30 days before the execution. If the distraint already occurs, you can at least try to limit its effects.
It is important to communicate with the bailiff and try to prevent inconveniences and complications. You can also make a junk if you try to hide, sell or try to prevent the bailiff from gaining access. On your neck you may find a criminal complaint for obstructing performance.
Against execution, the proposal to stop it – this is done in writing at the executor. This may be due to the following situations:
- Unauthorized execution order
- Set aside the judgment on the obligation to pay the undertaking
- Nor is the debtor’s assets sufficient to cover the execution costs
- Repayment of debt
Insolvency can save you from execution
Insolvency or also personal bankruptcy or debt relief. What is it? It is a possibility of solving financial bankruptcy, which is intended for private persons, but since 2014 the application can also be submitted by a natural or legal person doing business.
The debtor himself submits the insolvency petition to the insolvency court and has to meet several conditions in order to be able to comply.
- Regular income – this is an essential condition and income can be of various kinds (salary, business profits, rent, etc., pension, parental allowances, etc.). Revenue should be sufficient to cover min. 30% of debt up to 5 years. Resources may also be provided by a third party
- Two or more creditors – two or more creditors are required for insolvency. Multiple obligations with one creditor are not enough
- The liabilities are 30 days or more past due and the debtor is unable to pay them
- Net criminal record of the debtor
- Documentation of all necessary documents – list of assets, list of liabilities, data on income for the last 3 years, etc.
The fulfillment of these conditions does not automatically mean that the debtor’s proposal for debt relief will be accepted – but without fulfilling them, the chances are scarce or none.
Debt relief can be a way of preventing execution, but you can’t imagine going bankrupt when you declare personal bankruptcy. On the contrary. You have really hard times waiting, when you have to put all the means beyond the absolute minimum for survival to repay debts.
Is it possible to get a loan if I am in execution or insolvency proceedings?
Some people try to solve their difficult financial situation by means of a loan and prevent for example the imminent execution or help themselves in case of personal bankruptcy. But getting a loan under these conditions is almost unrealistic.
Most reputable providers are quite rigorously checking the financial status of applicants, whether they are problematic clients and whether they will be able to repay the loan. Examining the so-called creditworthiness of a client, which includes his credibility, solvency, credibility, etc., is the cornerstone of the process of any loan application or other financial product.
In doing so, providers draw information from, for example, debtors’ registers and may also require proof of fixed income from employment or business (or other sources). Great emphasis is placed on the creditworthiness review and on the “integrity” of the applicant, in particular by banking companies. With banking institutions, you probably do not walk with a loan application even in the event of an imminent execution, let alone after the bankruptcy.
However, there are non-bank lenders that target and offer loans to clients with reduced creditworthiness. However, there is a significant risk that you will run into even more trouble as you enter into a never-ending circle of loans and debt. The solution of the execution of the loan cannot be considered reasonable, because at best it will only postpone it.