Since 01 January 1995 natural persons in Austria have the possibility of debt relief within the framework of debt settlement proceedings. This is a special form of insolvency proceedings for natural persons, irrespective of whether they are consumers or individual entrepreneurs. The aim of the debt settlement proceedings is the ability to offer a person who is insolvent the chance to escape from an otherwise often endless cycle of constantly rising debt through accrued interest and new execution costs, and to become debt free after seven years. During this period a minimum quota of 10% should be achieved.
If the quota of at least 10% is not reached, then the court shall decide based on equity whether the debtor shall be discharged from the debts.
In 2014, 8,414 bankruptcies were opened on private and formerly self-employed persons in Austria. This is a decrease of 6.7% compared to 2013 (9,022 bankruptcies). The estimated insolvency liabilities amounted in 2014 to EUR 1,098 million and in 2013 to EUR 1,137 million.
After 20 years of practice, it is clear that the debt settlement proceedings provide the following benefits, which the execution proceedings were not able to provide:
- Regular payments over a longer period of time without constant petitions or additional costs for creditors
- Effective equal treatment of creditors
- Interest stop and no further prosecution costs for the debtor
- Financial rehabilitation after a period of financial strain.