Debts forgiven: when and how it happens

How to Settle Debts Through Debt Waiver

Settling all your debts without paying them is possible because debts can be completely forgiven in some cases thanks to debt waiver.
Contrary to popular belief, this is a procedure that applies to everyone, including individuals, not just companies and entrepreneurs.
Even a private citizen who is unable to meet their debts can resort to debt waiver.

Under article 14-terdecies of the debt waiver law (Law no.
3 of 2012), it is possible to arrange an agreement between the parties (debtor and creditors) where the creditor agrees to settle only a portion of the debt (based on the debtor’s financial ability) rather than the total amount.
The remaining debt is forgiven, granting the debtor a fresh start.

The law has evolved over time, becoming more streamlined with Law 155 of 2017.
Individuals can now benefit from the procedures outlined in it, with a suspension of enforcement procedures.
The new Business Crisis and Insolvency Code, which came into effect on July 15, 2022, has further expanded the debt waiver procedure to cover all debtors.

Debt Waiver: When Does It Happen?

More and more families and individuals are struggling with bills, taxes, mortgage payments, loan installments, and other expenses that they cannot afford.
As debt accumulates, the situation becomes increasingly dire, forcing individuals to take out more loans, creating a vicious cycle that is hard to break.

The solution in these cases is debt waiver, which allows for the forgiveness of debts that cannot be paid, ensuring creditors can recover part of their credits.
Through debt waiver, the debtor sees their remaining debts (those they cannot pay) extinguished, and their name is removed from the credit bureau.

With a debt waiver procedure, the debtor is provided with a realistic repayment plan that also allows for maintaining a decent standard of living.
This procedure not only clears debts by paying only what is affordable but also provides a sense of peace of mind.

Partial Debt Payment Methods

Naturally, if the debtor owns properties, these assets will need to be sold to settle the debts.
The individual must use their assets to repay the debts.
If the debt exceeds the proceeds from selling all assets, the remaining unrecoverable debt will be forgiven through debt waiver.

Who Is Eligible for Partial Debt Forgiveness?

To access the debt waiver procedure, the debtor must demonstrate merit, showing positive conduct.
Debt release is granted provided that the individual has not been convicted of fraudulent bankruptcy, has not hindered asset reconstruction, has not obstructed or delayed the procedure, has not previously undergone debt waiver in the past five years, has not engaged in fraudulent, wilful, or grossly negligent behavior leading to debt accumulation, and has not gone through debt waiver twice before.

In conclusion, debt waiver offers a way out for private citizens facing insurmountable debts, providing a viable path towards financial stability and peace of mind.