Is bankruptcy the solution?
When entrepreneurs can no longer pay their debts, they often think that bankruptcy is the solution. Unfortunately that is not the case. We are happy to explain why. According to the law, bankruptcy is a total seizure of all your assets. This means that you cannot freely dispose of your belongings, such as machines and car. You are also not allowed to do anything that has to do with your finances. The court appoints a trustee (often a lawyer) who checks whether your creditors can be paid by selling your properties and the money you have in your account. If there is nothing to sell or if the sale is insufficient, the trustee will, in consultation with the court, lift your bankruptcy after some time. In that case nothing has been arranged to resolve the debts and so they still exist. Debts have even increased due to interest and costs. The trustee must also be paid for his work and this claim is in addition to the rest of the debts. The debts are now even higher than before the bankruptcy. That is why we say: "Bankrupt, better not!"
If you have a BV, as a director you are only liable for the debts if you have not acted as it should. For example, you entered into obligations that you knew or could have known you could not fulfill. If you do business from a sole proprietorship or VOF, you are personally liable after bankruptcy for all business and private debts when the bankruptcy is lifted due to lack of income.
However, with a successful debt restructuring, you will be rid of your debts within a few years. For entrepreneurs who restart, this period is 3 years. For entrepreneurs who stop, also 3 years. In the event of bankruptcy, there is usually no solution and you remain liable for your debts. This liability can last as long as 20 years and feel like a life sentence. If you have financial problems, it is therefore important to act quickly. Only then can the damage be limited and bankruptcy prevented.
In this video, Jacqueline therefore answers frequently asked questions from entrepreneurs with financial problems. One of these is: 'have I been declared bankrupt?':
When are you bankrupt?
This is the case when the court pronounces the bankruptcy judgment on you or your company. It is also possible that you are technically bankrupt: that it already appears on paper that you are in a situation where you have stopped paying. What are you doing then? Is filing for bankruptcy before the court a solution? This is only the case if you have a BV, where you have not co-signed for anything privately and you have arranged everything with the Tax and Customs Administration.
Do not file for bankruptcy if you are personally liable, i.e. if you have a sole proprietorship, are a self-employed person without employees or are a partner in a general partnership. If you are personally liable for your debts and there is nothing to be achieved, the bankruptcy will eventually be lifted due to a lack of assets in the estate. In that case, the trustee has demonstrated that there is nothing to be gained, and therefore that debts cannot be paid. This does not release you from your liability! The claims persist for up to twenty years. What should you do if you are personally liable for your debts and you cannot pay? Make a debt settlement. We'll discuss exactly how that works in the next video.