Reconstruction (early suspension of payments)

If you cannot pay your debt to your creditors at the due date, you are per. definition insolvent. Even if your fortune is large enough to pay all your creditors once you have sold some of your assets.

You are just unlucky that your fortune is locked or tied up in assets that need to be disposed of before you can settle your debt. It could also be that some customers have not been able to pay your invoices, or you lost your liquid assets in a divorce and thus have been temporarily troubled in relation to your own creditors.

By principle, one is just as insolvent in the sense of the law as one who has lived beyond his means and cannot pay his creditors, as the law does not distinguish between how one has ended up in the situation.

If you are self-employed and become temporarily insolvent, it is important to act quickly and try to get an installment plan in place.

If you are taken into bankruptcy proceedings, you are suddenly “incapacitated”, as the court appoints a curator (typically the creditor’s lawyer) who takes over the management of the company, bank, house, car, etc. EVERYTHING you own is confiscated and tried sold as soon as possible at (forced) auction.

Therefore, it is important that you instead take responsibility and submit a bankruptcy petition to the court, to come under reconstruction, what was previously called suspension of payments. After this, one’s own lawyer can be appointed as the reorganiser.

So what does that mean practically speaking?

First of all, this means that you get some time to make extra money and pay off your debt.

This means that you can sell your assets yourself at a normal price and not at a shameful bid at a forced auction.

So you are still “master of your own house” and work with your lawyer to get back on your feet.

There are some formal requirements that must be met, including briefing the creditors and meeting with them in probate court.

A reconstruction lapses / ceases when you have paid your debt.

In fact, bankruptcy does not automatically happen once the creditor has received his money. The curator must dispose of everything he has and take his fee for the entire work (i.e., also the time that remains after the creditor who filed for bankruptcy has received his money).

A reconstruction typically lasts 6-9 months. This is the time you get to sell what is needed to repay (defaulted) debt.

You can easily continue to pay off non-defaulted debt at the same time. Only the part of the debt that is due must be paid to stop the reconstruction.

If it’s not possible to pay the debt during the reconstruction, the case is transferred to ordinary bankruptcy proceedings. It will also happen if your lawyer assesses that the reconstruction is hopeless, i.e., that you will not be able to repay the overdue debt.

If you are starting to be economically troubled and have been threatened with bankruptcy, contact the law firm and let us help you with a reconstruction instead.

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