Private bankruptcy

Private bankruptcy is a colloquial term for a private debt settlement procedure involving court proceedings. It means that the overindebted person has to pay back affordable amounts of money for a certain period. During this time they live just above the poverty line; in other words, they are obliged to live frugally. They are not allowed to take out new debt. The aim of the procedure is to enable overindebted people to make a fresh economic start by freeing them from their debt burden. However, private bankruptcy cases are very complex. It is therefore advisable to seek advice from a debt counseling service.