I am very interested in the discharge clause which is often included in bankruptcy legislation.

I found your email address an the Internet site JURISTISCHES INTERNETPROJEKT SAARBRÜCKEN.

(a) I am an economist examining the effects that bankruptcy legislation can have on entrepreneurship. In particular, I am very interested in the discharge clause which is often included in bankruptcy legislation. For example, a number of countries such as the United States and the United Kingdom offer the bankrupt individual a "clean slate" by way of discharge: the entrepreneur loses his assets to his creditors but cannot be pursued for any remaining claims which have not been met.

(b) I understand that the new German Bankruptcy Law will include a discharge clause. Can you tell me when the new Law comes into effect?

(c) Does the Law free the debtor of the remainder of his debt immediately or after a period of time (if so, how many years)?

(d) Does the discharge clause apply to all his debt? Or are items such as taxes or alimony payment exempt from discharge?

I would be grateful for responses to these questions. In return, I will send you a copy of our report which will include information on other countries which may be of interest to you.

Thank you.

Dear Mrs. W.!

Professor Herberger, a colleague of mine, asked me to answer your questions relating to the new German bankruptcy law.

(a) The statute is called Insolvenzordnung. I prepared a html-Version. You can take a look at it: http://ruessmann.jura.uni-sb.de/rw20/gesetze/insolvo/insfram2.htm In Germany the discharge is called Restschuldbefreiung and dealt with in Sections 286-303 Insolvenzordnung. Only individuals can apply for it.

(b) January 1, 1999

(c) Not immediately, only after a period of seven years of well behaviour, which means that the debtor has to hand over his income which is not exempted from seizure to a trustee, who will pay the creditors according to rules laid down in the statute.

(d) It does not apply to all his debt. Exempted are debts arising out of intentional torts. It does apply to taxes. With respect to alimony payments it does apply to payments due in the past (covered by the bankruptcy proceedings). For present and future debts it does not apply. Furthermore you have to take into account that the debtor only has to transfer his income that is not exempted from seizure to the trustee. Alimony payments affect the amount of income that is exempted from seizure.

I hope that helps!

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