Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/webturgu/domains/fab.lt/public_html/core/constructor.php on line 34
Questions
+370 686 18 228

Questions

Individual bankruptcy – what is it?

That is a process of law during which assets of insolvent honest individual are eliminated and all the incomes and assets received are allocated among creditors.  Legal possibility for individuals to file for the bankruptcy gives them a chance to restore their solvency during certain time and to start a new chapter of their life. Filling for bankruptcy gives a protection against debt collectors.

 

Legal proceedings are instituted only in case when debtor is an honest individual who is not responsible for being unable to repay debts.

If insolvency is a consequence of dishonest bargains or bad habits, or if a debtor is under conviction which has not expired – he cannot file for bankruptcy. Individual can file for bankruptcy regarding debts which occurred before the Law of individual bankruptcy came into force, that is before 1st of march 2013.

 

Other essential conditions for filling for bankruptcy:
  1. The person in debt has to initiate his bankruptcy procedure himself, and announce publicly that he cannot repay debts. Unlike bankruptcy of juridical individuals, the Law does not provide an opportunity for creditors or other individuals to initiate bankruptcy procedure.
  2. The total sum of debts must exceed 25 minimum monthly wages, accepted by Lithuanian Republic Government (25,000 LT)
  3. Place of bankrupt individual residence has to be in Lithuania. Otherwise the case of bankruptcy has to be initiated in the country where debtor’s main valuable interests are located.

 

Legal consequences of initiating bankruptcy procedure
  • Administrator of bankrupt manages all the debtor’s assets.
  • Access to monetary funds is restricted.
  • Accrual of interest and default interest is dissolved.
  • Fulfillment of debt liability is stopped
  • It is considered that the maturity of debt has expired.
  • All debts are written off after the bankruptcy procedure is finished.

 

The procedure for the distribution of income received during the bankruptcy proceedings

Plan of funds distribution is drawn by the administrator of the bankrupt.

Plan is drawn to set-up the amounts and priority of payments. Typically, the order of payments is as follows:

  1. Payments to meet the needs of the bankrupt individual and his dependents (alimony and costs of administering the bankrupt)
  2. Payments on the basis of labor relations in compensation for damage to others due to injuries received at work, occupational disease or death due to an accident at work.
  3. Meeting the requirements of the lender, which are guaranteed by mortgage – debt is paid on sale of the mortgaged property  to the creditor or by direct transfer of the property to the lender. In case if the mortgaged property is sold for the price which exceeds debt liabilities. The resulting balance intended to meet the claims of other creditors.
  4. Other debt claims by creditors.
     

With a shortage of funds to repay all the debts of one of a number, available funds are distributed to creditors in proportion to the amounts borrowed.
The claims of creditors of each subsequent series are satisfied only after full repayment of the previous series debts.

 

The process of bankruptcy

The whole process consists of several stages:

I. The most important stage – an individual goes to the court with a request to initiate a case of bankruptcy. The Law indicates that one month before filling the bankruptcy the debtor has to inform in written about that all his creditors

II. The Court initiates a case of the bankruptcy and appoints an administrator of the bankrupt, who organizes all of the bankruptcy proceedings, the implementation of the plan to restore the solvency of the bankrupt individual and the sale of his assets (if required). Bankruptcy administrator commands his assets and funds.

III. The administrator of the bankrupt draws a plan of restoring the solvency of bankrupt individual. This stage requires special care. The plan is required to state the reasons on which the debtor cannot settle with creditors at the moment. Also it is required to provide information about how bankrupt individual intends to settle with creditors, what will be his earnings and personal expenses, how much money he will need in order to support dependents and to pay expenses of administration of bankrupt. Creditors ‘ discounts are specified and provided, if any. Plan to restore solvency has to be accepted by the meeting of creditors. During the process of bankruptcy it is possible to correct the plan.

IV. The Court confirms a project to restore solvency is submitted by the bankruptcy administrator. Maturity of the project – 5 years.

At this stage it is possible to sell the assets of a bankrupt individual. His financial obligations begin to be repaid.

The essence of the bankruptcy process is that upon its completion the remaining outstanding debt is written off.

So, part of the debt will be paid to lenders, while the other part, which the debtor did not have time to return in a five-year term, will be written off.

After the implementation of the plan all debt obligations of a bankrupt individual will be considered legally executed. If the creditors do not approve the plan, the court makes the decision on this issue based on how valid are the reasons of creditors’ disagreement.
The court’s decision in this case is final.

 

The price of the bankruptcy

We created a flexible system of calculation for our clients. We can recommend you the administrators of the bankrupt and/or solicitors. We can cooperate with already working for you lawyers. Payment for our service is proportional to our labor costs.

Of course, if you have a debt of 35000 LT and 18 creditors, bankruptcy procedure will require more labor costs than if you have two creditors and the debt of 28000 LT.

We can guarantee that our advice and work will allow you to pay debts that you thought would be eternal, in 5 years. This will be done without additional financial resources, but simply through rational calculation of all your assets and incomes. As far as possible we will take into account your wishes, as well as provide the greatest possible benefit for your situation.