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Insolvency
The advent of the financial crisis and its disastrous consequences on the economy and employment, and the consequent deterioration in the financial situation of Portuguese families and companies, definitely brought the word “insolvency” into the daily lexicon of Portuguese people. But what does it mean to be insolvent? Being insolvent or bankrupt means not having the necessary liquidity to meet overdue obligations (or being on the verge of not being able to do so). In this case, whether it is person or a company, the debtor is obliged to file for insolvency.
Choose one of the following options:
Creditor:
the question that certainly comes to mind of creditors when they get the information that their debtor filed for insolvency: “Is it possible to recover the amount in debt? How?”
The answer is yes, it is possible, through specific legal mechanisms, which allow creditors to enforce their respective interests within the scope of insolvency proceedings.
Debtor:
“I’m bankrupt. What now!?” First of all, you should consult a lawyer immediately. In fact, the insolvency procedure is a judicial process, in which only lawyers can intervene, in addition to the fact that legal advice carried out by any entities other than lawyers is considered crime.
DEBTOR: Individual Person
A bankrupt person has basically two alternatives:
PAYMENT PLANS
Insolvency is a comprehensive procedure, which encompasses not only the entirety of the debtor’s assets, but also all of its creditors.
With the approval of the payment plan, the insolvent debtor is allowed to pay all of his overdue debts in instalments.
LIABILITY RELIEF AND FRESH START
If it is not possible to draw up a payment plan or if it is not approved within the scope of the insolvency proceedings, the insolvent debtor has the possibility, under certain conditions required by law, to benefit from the exoneration of the remaining liabilities, also known as in slang for ‘fresh start’, ‘debt relief’ or ‘debt forgiveness’.
DEBTOR: Companies
INSOLVENCY PLAN
If it is economically viable, the insolvency procedure will then aim to settle its liabilities by presenting a payment plan, as well as revitalizing the business through an insolvency plan, also known as a recovery plan.
SALE OFF
If it is not possible to draw up a recovery plan, the insolvency procedure will aim to satisfy creditors’ interests by selling the company’s assets.
Insolvency
