Debt Rearrangement

Davis

Hello Forum.
I have accumulated CHF 50,000 in debt due to unforeseen medical expenses and a recent job loss. I am currently unemployed but have a part-time job offer starting in two months. I have conducted a budget analysis, because i'm willing to fully pay my debt, the analysis shows that I can pay CHF 1,400 per month starting from when I begin my part-time job. This would allow me to repay the debt within three years.
However, if I am unable to reach an agreement with my creditors, what options do i have?

Vanderbilt

Davis
Hello.

If you are unable to reach an agreement with your creditors for out-of-court debt restructuring, you can seek a solution through court-ordered debt restructuring. Here is the process you need to follow:
1.Apply to the Competent Court: You must submit an application to the competent court at your place of residence. The debt counselling centre in your canton can assist you with this process.

2.Court Review: If the court accepts your request, it will suspend the debt enforcement proceedings by ordering a deferral. This suspension will halt any ongoing collection efforts against you.

3.Appointment of an Administrator: The court will appoint an administrator to oversee the debt restructuring process. This administrator will work with you to manage your finances and debts.

4.Proposal for Settling the Debt: During the suspension period, you will need to make a proposal for settling your debt. This proposal should outline how you plan to repay your creditors.

5.Court Costs: Be aware that there are court costs involved in debt restructuring proceedings. As the debtor, you are responsible for these costs, which can vary depending on the complexity and length of the proceedings.

In summary, court-ordered debt restructuring provides a structured approach to managing your debts when out-of-court agreements are not possible. While there are associated costs, this process can offer you legal protection and the opportunity to develop a feasible plan to repay your creditors.

Davis

Vanderbilt
Thank you for your answer,
but one thing remains unclear to me.
What happens if the court is not able to rearrange my debt?

Vanderbilt

Davis
If you're unable to restructure your debts, declaring personal bankruptcy might be your next step. Here's what happens in that case:

Asset Distribution: When you declare bankruptcy, your assets will be sold off and the proceeds will be distributed among your creditors. However, this process doesn't erase your debt completely. Whatever debt remains after your assets are liquidated will still be owed.

IOUs for Remaining Debts: After the distribution, creditors receive IOUs for any outstanding amounts. This means they can still claim any future assets you might acquire.

Debt Enforcement Halts: The good news is that bankruptcy halts any ongoing debt enforcement proceedings. This means creditors won't be able to take further legal actions against you unless you acquire new assets.

Wage Distraint Cancellation: If your wages were being garnished, this will stop once you declare bankruptcy. You’ll be able to keep your entire salary, which can provide some much-needed financial relief.

No Debt Elimination: It's important to note that personal bankruptcy doesn't eliminate your debts. It just pauses the enforcement process and gives you some breathing space to manage your finances without the immediate pressure from creditors.

In summary, personal bankruptcy won't erase your debts but will stop creditors from pursuing further legal actions. This could give you the chance to stabilize your finances and work towards recovery.

Hope this helps clarify things. If you have more questions, feel free to ask!