Debt relief is the primary goal of consumer bankruptcy – post of the Supreme Court of May 25, 2021, file ref. Akt and CSKP 100/21
The legal structure of consumer bankruptcy is subordinated to the debt relief of an insolvent natural person. In the proceedings regulated in Art. 4911 of the Bankruptcy Law et seq. the point is that a person who does not run a business may return to normal life, and not fall into poverty.
The circumstances of the case and the content of the judgment
The bankruptcy proceedings of Maria K. as a natural person not conducting business activity were pending before the district court. The court of first instance canceled the bankrupt’s liabilities recognized in the lists of receivables and all other liabilities arising before the bankruptcy declaration without establishing a repayment plan. As an argument for such a decision, he adopted the personal situation of the debtor. The decision was upheld by the district court. One of the bankrupt’s creditors appealed against the court’s decision, arguing that the bankrupt had the possibility of partial repayment of the debt, even to a minimal extent.
The Supreme Court dismissed the creditor’s cassation appeal, finding that the costs of maintaining the consumer and his dependents are greater than the earning potential, and this condition does not promise improvement even in the future. In its justification, the Supreme Court stated that:
- the primary goal of the so-called consumer bankruptcy is the debt relief of a natural person,
- if it is established that the personal situation of the bankrupt clearly indicates the bankrupt’s inability to make any repayments under the creditors’ repayment plan, the court should cancel his liabilities without establishing a repayment plan,
- the resignation from establishing the repayment plan should, however, be exceptional and be justified in the objectively determined state of health of the fallen, his infirmity and inability to work.
The presented ruling is a manifestation of a gradually developing jurisprudence line. So far, a similar position was expressed by common courts (see the decision of the District Court in Rzeszów of October 13, 2020, VI Gz 169/20). It was noted that the condition for declaring bankruptcy against consumers without establishing a repayment plan is not the prior determination of the consumer’s property. From the point of view of the goal of consumer bankruptcy, the most important thing is to compare the earning capacity with the cost of living of the bankrupt and his dependents. As a rule, the condition for being released from debts is the sale by the trustee of all assets and the implementation of the repayment plan. However, if the debtor’s obligation to repay the debts of any kind would prevent the fallen from returning to normal life, and there is no prospect of changing the debtor’s difficult situation, priority should be given to debt relief from the fallen consumer at the expense of the function of satisfying creditors.