Bankruptcy estate

A bankruptcy estate is a legally independent entity that arises when a company or private individual is placed in bankruptcy proceedings.

Any assets that a company or private individual owns at the time of bankruptcy are transferred to a legally independent entity - called the bankruptcy estate. The bankruptcy estate is managed by a trustee appointed by the bankruptcy court.

The trustee is typically a lawyer or otherwise specializes in estate administration.

A private individual or company that is unable to pay its obligations as they fall due is insolvent. This could be rent, installments or other bills. In such cases, the debtor can be placed under bankruptcy proceedings.

It is typically either the creditor or the debtor who files for bankruptcy.

What are the consequences of bankruptcy?

The consequence of bankruptcy is that the debtor's assets and debts must be assessed and possibly realized so that creditors can receive payment for all or part of their claims.

Bankruptcy means that the owner loses the right to control their property and assets. This applies to both private individuals and companies in bankruptcy.

What is not part of a bankruptcy estate for private individuals?

Basically, the former owner can no longer control their finances and assets, but there are certain assets that are exempt from the bankruptcy estate - known as the trangsbeneficiet.

Hardship covers the concept of "a modest home and modest living".

In other words, property that is necessary to maintain a modest home for the debtor - such as furniture, TV, rental property, etc. cannot be seized. However, this only applies if the property is not unreasonably expensive, such as designer furniture.

Remember to report your claim to the bankruptcy estate

If you are a creditor and discover that a debtor has filed for bankruptcy, this is often a bad sign. A bankruptcy estate rarely has the means to pay all creditors or the entire amount owed.

As a creditor, you should therefore be happy if you get part of your claim back from a bankruptcy estate - which can be a possibility.

It is important that you as a creditor report your claim to the bankruptcy estate, for example an unpaid invoice.

You typically have 4 weeks to report your claim to the bankruptcy trustee. This is done by writing to the trustee by letter or email. The trustee's contact details can be found on the Bankruptcy Court's website. It is usually sufficient to send the unpaid invoice, promissory note, loan documents or similar to the trustee.

If you do not file the claim within the 4-week deadline, you risk losing the claim and thus not receiving any dividends from the bankruptcy estate.

When the bankruptcy estate is settled, the trustee will often send a statement of any dividends to the creditors.

Debt collection and bankruptcy estate

If you have one or more collection cases against a bankruptcy estate, it will be necessary to end these actions.

We recommend that you settle the claim and send it to the trustee.

If your case is handled by a lawyer or debt collection agency, they will usually be notified if your debtor is placed in bankruptcy proceedings and they will often ask you if the claim should be sent to the trustee unless otherwise agreed.