A discharge of debts without establishing a repayment plan is a special form of debt relief in bankruptcy proceedings, intended for individuals who, for reasons beyond their control, are unable to repay their creditors, neither now nor in the future. This solution is exceptional in nature and is applied only in situations of permanent inability to work or earn an income.
What is a discharge of debts without establishing a repayment plan?
In practice, it means that once bankruptcy is declared, the court immediately discharges the debts without establishing any repayment plan. This solution is provided for in Article 491 of the Bankruptcy Law, under which the court may discharge the debtor’s obligations if it finds that the debtor is permanently unable to make any payments.
A discharge without a repayment plan is permanent in nature. The court determines that there is no real prospect of the debtor’s financial situation improving.
Conditional vs. unconditional discharge – what is the difference??
In the case of a conditional discharge, the court assumes that the debtor may, in the future, regain the ability to work or improve their financial situation. In such a scenario, the discharge is “suspended” for a specified period.
What does a court decision on the discharge of debts mean?
Once the court issues a decision discharging the obligations, the debtor is no longer liable to their creditors. This opens the door to a fresh financial start, although the bankruptcy entry will remain visible in the registers for some time.
Who can benefit from this solution?
A discharge of debts without establishing a repayment plan is available exclusively to natural persons – consumers, who are undergoing bankruptcy proceedings. The key requirement is that the court must determine that the debtor is permanently unable to make any payments. This follows from Article 491[16] of the Bankruptcy Law, which obliges the court to assess whether there is any real possibility of repaying creditors now or in the future.
In practice, this solution is used by individuals whose life circumstances prevent them from taking up work or earning an income. Most often, these are people with chronic illnesses, severe disabilities, seniors with no realistic prospects of returning to the labour market, or persons providing continuous care for a close relative. It is essential that these limitations do not result from the debtor’s fault but are objective and beyond their control.
When can the court discharge debts without a repayment plan?
Under Article 491[16] of the Bankruptcy Law, the court may decide to discharge debts without establishing a repayment plan if the bankrupt individual is permanently unable to make any payments. This applies to situations where the inability to earn an income is not temporary but objective and long-term.
It is important to emphasise that a discharge without a repayment plan is applied only in exceptional circumstances. By design, it is not a “standard” solution but one intended for individuals whose health condition, age, disability, or need to provide constant care for a loved one prevents them from taking up employment, either in the near future or in the more distant perspective. Only in such circumstances may the court refrain from establishing a repayment plan and conclude the proceedings with a full discharge of debts.
Permanent inability to repay debts
The key point is that the inability to earn an income must be permanent. It must be objective and long-lasting, for example, resulting from a serious illness, disability, or the need to provide constant care to a close relative.
Causes beyond the debtor’s control
For the court to apply this solution, the debtor’s inability to work cannot stem from their own neglect. Mere unemployment or unwillingness to work is not sufficient.
Lack of income vs. inability to work – why are they not the same?
The court examines not the debtor’s current income, but their earning capacity. If the bankrupt individual could work but chooses not to, they will not meet the requirements for a debt discharge.
How the procedure for discharging debts step by step works
When can the court apply this mechanism?
This most often occurs at the end of bankruptcy proceedings, after the debtor’s assets have been liquidated. Once the court analyses the debtor’s life circumstances, it issues a decision discharging the debts without establishing a repayment plan.
What documents can help you obtain a discharge?
The debtor should document their permanent inability to work, for example through:
medical certificates (ZUS or a certifying physician),
disability rulings,
decisions granting a disability pension,
other evidence confirming the inability to take up employment.
Discharge of debts – step-by-step list
Filing a bankruptcy petition
Dłużnik składa w sądzie wniosek o upadłość konsumencką. W tym momencie ponosi jedyną opłatę – 30 zł.
Court’s assessment of the situation
The court examines the circumstances of the case, including the reasons for insolvency and the debtor’s current life and health situation.
Declaration of bankruptcy and appointment of the trustee
Once bankruptcy is declared, a trustee is appointed. The trustee identifies the debtor’s assets and carries out liquidation activities, if there are any assets to liquidate.
Assessment of the debtor’s earning capacity
Based on documents, medical opinions, disability rulings, and other evidence, the court assesses whether the debtor is permanently unable to make any payments (Article 491[16] of the Bankruptcy Law).
Determining whether a repayment plan is possible
If the court finds that the lack of earning capacity is objective and long-lasting, it considers whether it is justified to waive the repayment plan entirely.
Applying the discharge in exceptional cases
If the court concludes that the conditions under Article 491[16] are met and the debtor’s situation is particularly difficult with no prospect of improvement, it may discharge all debts without establishing a repayment plan.
Closing the proceedings and full debt relief
Once the decision is issued, the debtor is released from their debts, and the bankruptcy proceedings are closed.
Does a debt discharge involve any costs?
Who covers the costs of the trustee and asset liquidation?
In consumer bankruptcy cases that end with a discharge without a repayment plan, the costs of the proceedings are covered by the State Treasury. This includes both the trustee’s remuneration and any asset-liquidation expenses.
Does the debtor incur any fees?
The debtor pays only one court fee of 30 PLN when submitting the bankruptcy petition. This is the only cost they bear in such proceedings.
What are the consequences of a debt discharge for the debtor?
Is it possible to declare bankruptcy again?
As a rule, declaring bankruptcy again is possible, but only if new debts arise that cannot be repaid for reasons not attributable to the debtor.
Impact on creditworthiness and registry entries
Information about the bankruptcy remains in debtor registers for a certain period, which may make it more difficult to obtain credit. Over time, however, this impact diminishes, and the debtor can gradually rebuild their financial credibility.
Summary
A court decision to discharge debts without a repayment plan means full debt relief for the debtor, without the obligation to make any payments. It offers a chance to start life “anew,” free from the burden of financial obligations. However, it is important to remember that such a decision carries certain consequences. For some time after the proceedings conclude, the debtor’s creditworthiness may be limited, and information about the bankruptcy will appear in the relevant registers. Over time, however, this impact diminishes, and the person who obtained the discharge can gradually rebuild their financial credibility and life stability.
In short, a discharge of debts without a repayment plan is not only a legal mechanism but also a genuine opportunity for a new beginning, provided it is used properly and supported by an honest presentation of one’s life and health circumstances to the court.
Contact us if you would like to check whether you qualify for a debt discharge without a repayment plan.
Frequently Asked Questions (FAQ)
Can the court refuse a discharge?
Yes, if it finds that the debtor is able to work or that their difficulties are only temporary.
Can you incur new debts after the discharge?
Yes, new obligations are not covered by the previous discharge.
Can an unemployed person obtain a discharge?
Unemployment alone is not grounds for discharging debts. What matters is that the inability to work is permanent and caused by factors beyond the debtor’s control.
Does the court always examine income?
The court examines earning capacity – that is, the debtor’s potential to generate income, not their temporary financial situation.
How long does the procedure take?
It depends on the case, but typically several months. The duration of the proceedings depends on the number of creditors, the debtor’s assets, and the complexity of the matter.
Does the discharge cover child support obligations?
No. Child support obligations cannot be discharged in consumer bankruptcy, neither under a repayment plan nor through a discharge without establishing such a plan. This means that even if the court finds a permanent inability to repay other debts, the obligation to pay child support remains.
