Imminent insolvency: How debt counseling can help
Imminent insolvency can affect both private individuals and companies. This situation often leads to excessive indebtedness if help is not sought in a timely manner. An experienced debt counselor can set you on the right path and guide you through the process.
What is impending insolvency?
According to Section 18 Paragraph 2 of the Insolvency Code (InsO), impending insolvency exists if the debtor “is unlikely to be in a position to meet the existing payment obligations when they fall due.” It means that a debtor will soon no longer be able to pay his bills.
What to do in case of insolvency?
For private individuals, a debt counselor can help clarify the financial situation, determine liabilities and, if necessary, initiate personal insolvency. For companies, however, it becomes more complex, especially if there is a risk of a liability trap. In this case, an expert should be called in as quickly as possible in order to minimize the risks and file for insolvency in good time.
Limited eligibility for companies
The right to file for insolvency in the event of impending insolvency lies with the management, not with the creditors. An improper application can lead to personal liability risks. Therefore, advice from an expert is particularly important.
How is impending insolvency determined?
The determination is made by means of a financial plan that compares future income and expenditure. If this results in a probability of more than 50% that insolvency will occur, impending insolvency is considered to have occurred.
Conclusion
If you are facing impending insolvency, you should not hesitate to contact a debt counseling service. Early help can make the difference and help to avoid serious financial consequences.
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