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07 December 2018
A previous article discussed the effects of a company's insolvency on its administrators (for further details please see "The personal bankruptcy of company administrators"). This article examines the effects of a bankruptcy between spouses and focuses on the waiver of remaining debts after the closure of the bankruptcy.
Bankruptcies opened prior to 1 May 2018 are governed by the former Bankruptcy Statute of 1997. This statute included a principle that a natural person could be discharged of their remaining and outstanding debts – a so-called 'waiver' – at the moment of a bankruptcy's closure.
The waiver implies that, in principle, the bankrupt natural person will be released from any residual debt towards creditors that existed at the time of the bankruptcy's closure. The waiver does not apply to:
As a result of the Constitutional Court's rulings and certain legislative changes, the discharge was almost automatically granted to natural (bankrupt) persons (where, for example, no fraud had been committed).
The discharge's beneficial effects were extended to the bankrupt person's spouse. As a result, the spouse could also be freed from personal debts. For example, even if both spouses had signed a loan to buy a property, the bank could, after the bankruptcy of one spouse and the waiver granted to that spouse, not claim the remaining debt after sale of the property from the other spouse. Needless to say, this beneficial effect was not welcomed by financial institutions.
For bankruptcies that have happened since 1 May 2018, and so fall under the new legal framework, this situation has changed. The new Article XX.174 of the Economic Code now provides that:
the waiver will not affect the personal or joint debts of the spouse, former spouse, legal cohabitant or former legal cohabitant resulting from an agreement concluded by the said persons, whether such debts were contracted alone or together with the bankrupt person, if these debts are external to the professional activity of the bankrupt person. (Emphasis added.)
In a recent judgment of 20 November 2018 the Brussels Court of Appeal confirmed these principles. In that matter, the court extended the beneficial effects of the waiver onto the spouse's debts (as the bankruptcy fell under the previous regime). However, the court also considered that, regarding new bankruptcies, the waiver would no longer have that effect.
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