Although the process itself may seem accessible and relatively simple, it requires precise preparation of the application and complete, transparent and accurate documentation. It is the quality of the materials collected that is of key importance for the court’s assessment of whether the conditions for declaring bankruptcy have actually been met. Errors at this stage not only prolong the proceedings, but may also lead to the application being dismissed on formal grounds.

Legal basis and grounds for declaring consumer bankruptcy

The institution of consumer bankruptcy is regulated by the Act of 28 February 2003 – Bankruptcy Law (Journal of Laws of 2022, item 1520, as amended), in Title V, Part III. The prerequisite for declaring consumer bankruptcy is the debtor’s insolvency, which means a state in which they are unable to meet their due financial obligations, with a delay in payment exceeding three months.

When considering the application, the court analyses not only the existence of insolvency in a purely economic sense, but also its nature and causes. Among other things, documents showing the history of debt, payment capacity, changes in income level and random events affecting the financial situation are verified. Currently, following the 2020 amendment, the court does not dismiss the application solely on the grounds that the debtor caused the insolvency intentionally or as a result of gross negligence, but these circumstances do affect the content of the final decision, in particular the length of the repayment plan. The application for bankruptcy is submitted to the district court – commercial division for bankruptcy matters, competent for the debtor’s place of residence.

Documents required when filing for consumer bankruptcy

An application for consumer bankruptcy must be submitted on an official form, which is widely available on the website of the Ministry of Justice. This form includes, among other things, the debtor’s personal details, information on the reasons for insolvency, a list of assets and liabilities, and monthly living expenses.

The application must be accompanied by a statement of income and expenses. In addition, it is necessary to submit documents confirming the current financial situation, including loan agreements, income certificates, enforcement documents and correspondence with creditors and public institutions.

When assessing the application, the court considers not only its formal correctness, but also the credibility and consistency of the data presented. In practice, the more detailed and complete the documentation, the more efficient the examination of the case and the greater the chances of a positive outcome.

List of creditors and detailed information about the debt

An integral part of the form is the list of creditors. The debtor is required to indicate all creditors known to them, together with full identification details – name or first and last name, address, as well as legal title and the exact amount of the debt. In addition, the due date of the liability must be indicated, which allows the court to assess whether the debt actually qualifies as ‘due’.

Both liabilities arising from credit agreements or loans, as well as rent arrears, maintenance arrears, debts to public authorities, court fees, administrative penalties and any other financial liabilities are subject to disclosure. Contingent liabilities must also be included. According to the case law of bankruptcy courts, failure to disclose all liabilities may be treated as an act of bad faith, which at a later stage of the proceedings may result in the refusal to write off debts or the revocation of the established repayment plan.

Documentation concerning assets and their components

The form also requires a detailed description of the assets. This applies not only to real estate and vehicles, but also to home furnishings, computer equipment, jewellery, cash assets, as well as shares in companies, property rights, savings and deposits. The value of each asset should be indicated, preferably based on current market data or expert appraisals.

Disclosure of all assets is important from the point of view of both the interests of creditors and the integrity of the proceedings. In the event of bankruptcy, these assets will be included in the bankruptcy estate and liquidated by the trustee. Concealing assets, donating them or selling them at an undervalued price shortly before filing the petition may be considered an action intended to harm creditors and result in negative legal consequences.

How to prepare the documentation correctly to avoid mistakes?

From the point of view of law firms and bankruptcy courts, the biggest problem is inaccurate, incomplete or contradictory information in applications. It is not uncommon for a single creditor to be indicated on the form, while the attached documentation shows that there are several. A lack of signature on the financial statement, incorrect calculation of monthly costs or outdated address details are just some of the typical errors.

Each of these errors requires a request for additional information, which prolongs the proceedings and sometimes even prevents them from being initiated. To avoid this, it is important to ensure that the data in all attachments is consistent, that the documents are in logical order, and that the information provided is up to date. It is definitely worth seeking the assistance of a restructuring advisor or legal advisor in this regard, who will not only verify the correctness of the documentation, but also help to prepare it in a manner that meets the requirements of court practice.

What happens after the application is submitted?

After the application is submitted, the court verifies its completeness and compliance with formal requirements. If there are any deficiencies, the debtor is requested to remedy them within seven days. If the documentation is correct, the court proceeds to examine the merits of the case. The grounds for insolvency, the accuracy of the statements made, and the circumstances surrounding the debt are analysed.

As a result, the court may declare bankruptcy, dismiss the application or discontinue the proceedings if there are negative grounds for doing so (e.g. lack of insolvency, obvious falsity of data). In the event of bankruptcy, the debtor’s assets are transferred to the administrator, who draws up an inventory and a liquidation plan. At a later stage, the court issues a decision on the repayment plan for creditors, the cancellation of part of the liabilities or, in special situations, complete debt relief without a repayment plan.

If you have any questions about consumer bankruptcy, please contact RBBC Law Firm. Our experts will be happy to help and advise you on the best solution.