Personal bankruptcy — in the sense of bankruptcy requested by the debtor themselves — is a step with serious consequences, but one that may represent an orderly resolution in the face of definitive insolvency. Swiss law strictly governs this procedure within the broader framework of debt enforcement and bankruptcy, particularly regarding who may benefit from it and the effects on assets and debts. PBM Avocats accompanies natural persons and directors confronted with this situation from its offices in Geneva and Lausanne.
Who May Request Their Own Bankruptcy? (art. 191 DEBA)
In Swiss law, the right to request one's own bankruptcy is reserved for natural persons who are traders registered in the commercial register (art. 191 DEBA). A sole trader, the unlimited partner of a partnership, or a registered self-employed person may thus appear voluntarily before the court and declare their insolvency.
Non-trader natural persons — i.e., private individuals without an activity registered in the commercial register — do not have this right. They may only be made bankrupt by way of ordinary enforcement proceedings, and only if they have accumulated debts in the context of an activity that subjects them to bankruptcy proceedings. In the case of personal over-indebtedness of a private individual, other solutions must be considered: amicable debt restructuring, repayment plan, negotiation with creditors.
Immediate Effects of the Opening of Bankruptcy on Assets
From the pronouncement of the bankruptcy judgment, the debtor is dispossessed of the administration and disposal of their assets (art. 204 DEBA). All their assets — with the exception of unattachable assets listed in art. 92 DEBA — enter the bankruptcy estate and pass under the control of the bankruptcy administration. The debtor may no longer validly dispose of their assets, collect claims or contract on behalf of the estate.
Regarding debts, all existing claims become immediately due and payable (art. 208 DEBA), even those with a future term. Interest ceases to run on unsecured debts (art. 209 DEBA). Individual enforcement proceedings in progress are suspended and will be extinguished at the closure of the bankruptcy. The debtor is required to cooperate loyally with the bankruptcy administration, declaring the entirety of their assets and debts.
The Bankruptcy Procedure: Course of Events for the Debtor
The debtor who requests their own bankruptcy files a reasoned application with the court, accompanied by a statement of their assets (inventory) and liabilities (list of debts and creditors). The court verifies the conditions, summons the debtor to a hearing and, if convinced of insolvency, pronounces the opening judgment.
The procedure then runs its course: inventory by the bankruptcy office, call to creditors, establishment of the schedule of creditors, realisation of assets, distribution of proceeds. If the assets are insufficient to cover the costs of the proceedings, the court may pronounce summary liquidation (art. 231 DEBA), which is faster and less costly. Our lawyers accompany the debtor throughout this procedure and ensure their rights are protected.
Discharge of Remaining Debts (art. 265a et seq. DEBA)
At the end of the bankruptcy, unmet claims survive and give rise to certificates of shortfall. The debtor thus remains exposed to new enforcement proceedings as soon as they acquire new assets or income. To escape this burden definitively, natural persons who have requested their own bankruptcy may initiate a procedure for discharge of remaining debts (art. 265a et seq. DEBA).
The court designates a commissioner and sets an observation period (two to five years) during which the debtor must: cooperate loyally, allocate to their creditors the attachable portion of their income, and demonstrate that they did not cause their insolvency through serious fault. At the end of the observation period, if these conditions are met, the court pronounces definitive discharge of the remaining debts — the debtor then starts afresh, freed from all their former debts.
Frequently Asked Questions on Personal Bankruptcy
Who can request their own bankruptcy in Switzerland?
In Switzerland, only natural persons who are traders registered in the commercial register may request their own bankruptcy (art. 191 DEBA). Natural persons who are not traders (private individuals) cannot declare bankruptcy under ordinary DEBA proceedings. They may, however, benefit, after bankruptcy proceedings, from discharge of remaining debts (art. 265a et seq. DEBA) if they meet certain conditions. This distinction is fundamental when choosing the strategy to adopt.
What is dispossession of the bankrupt debtor?
From the pronouncement of the bankruptcy judgment, the debtor is dispossessed of the management of their assets (art. 204 DEBA): they lose the right to dispose of their assets, pay their debts, enter into contracts binding the estate, or collect claims. These powers pass to the bankruptcy administration. Dispossession covers all the bankrupt party's assets at the time of opening, as well as assets acquired during the proceedings. Only unattachable assets (art. 92 DEBA) remain outside the estate.
What are the effects of bankruptcy on the debtor's debts?
The opening of bankruptcy makes all debts immediately due and payable (art. 208 DEBA), even those with a future term. Interest ceases to run on unsecured claims (art. 209 DEBA). Individual enforcement proceedings against the debtor are suspended. At the end of the proceedings, if assets are insufficient, unsecured creditors receive a certificate of shortfall. These claims survive against the debtor, but their recovery is conditional on future acquisition of new assets.
Does bankruptcy allow one to be released from all debts?
No, not automatically. At the end of the bankruptcy, unmet debts survive and may be resumed by way of new certificates of shortfall (art. 265 DEBA). For natural persons who have requested their own bankruptcy, a specific procedure for discharge of remaining debts (art. 265a et seq. DEBA) may be initiated if they have cooperated loyally with the proceedings, are not responsible for their insolvency through serious fault, and if their future income will allow them to meet part of their debts.
How does the procedure for discharge of remaining debts proceed?
The discharge of remaining debts (art. 265a DEBA) is a specific procedure applicable to natural persons who have requested their own bankruptcy. After the closure of the bankruptcy, the debtor may ask the court to be discharged from uncovered debts. The court designates a commissioner and sets an observation period of two to five years during which the debtor must actively cooperate and allocate to their creditors the attachable portion of their income. At the end of this period, if the conditions are met, the court pronounces definitive discharge of the remaining debts.