ECONOMY

Bankruptcy code forgives debts to state

bankruptcy-code-forgives-debts-to-state

Debts to the state and social security entities will be forgiven for debtors who are also relieved of other arrears in case of bankruptcy, according to a ministerial decision regarding the application of the new bankruptcy code.

The exemption from the payment of requirements will concern both individuals and companies and will be granted 36 months after the court has declared a person or an entity formally bankrupt, but only after the liquidation of their assets in their entirety.

The new bankruptcy code and the capacity of an individual or a company to resort to bankruptcy to relieve themselves of their debts were activated in early 2021. So far there has not been a single case of an entity applying for bankruptcy based on the new system, but all estimates are that the peak of the pandemic and the chain reaction in the economy will lead to a significant number of people and companies defaulting on their obligations. 

They may now seek their forgiveness from their debts through the new process, which requires the proof that a debtor is genuinely unable to meet their obligations.