Personal bankruptcy

When the bankruptcy court has made a bankruptcy order, the bankrupt individual loses the right to deal with his/her own money and assets. The bankruptcy court appoints an impartial trustee, whose duty it is to measure and evaluate the total debts. Moreover, the trustee must collect and sell the assets owned by the individual. The money received by the trustee is distributed among the creditors.

In the bankruptcy proceedings, the trustee will include all assets and possessions which are not needed to have a modest home and live a modest life.

In rare cases, rented premises occupied by the debtor can also be included in the bankruptcy proceedings.

You are not debt-free after a bankruptcy, but the assets that were sold in connection with the bankruptcy have contributed to reducing your debts.

Several people choose to apply for debt rescheduling after a bankruptcy, and if your debts essentially come from commercial activities, more lenient rules apply.

Read about debt rescheduling (in Danish)

A bankruptcy petition must be in writing.

You can fill in a form, which you must submit to the bankruptcy court in the judicial district in which the debtor resides. If the debtor carries out business activities, the address of his/her company determines the judicial district.

In Greater Copenhagen (Copenhagen, Frederiksberg, Glostrup, and Lyngby judicial districts), the Maritime and Commercial Court of Copenhagen hears bankruptcy cases. Everywhere else, the bankruptcy divisions of the district courts perform this task.

There are two different bankruptcy petition forms in relation to individuals – one if another person owes you money, and one if you apply for your own bankruptcy.

Find a court via address search (in Danish)

Petition form to apply for your own bankruptcy (in Danish)

Petition form to apply for another person’s bankruptcy (in Danish)

No, not all creditors have equal priority. In bankruptcy proceedings, there is an order of priority according to which the creditors are paid, the so-called order of priority of creditors. The individual classes of creditors do not rank equally, but all creditors within a class rank equally among themselves.

First, all costs connected with the occurrence of the bankruptcy event and the bankruptcy proceedings are paid – i.e. trustee, court fees, etc.

Second, other bills in connection with the proceedings are paid – e.g. for lawyers’ restructuring attempts.

Third, expenditure on wages and salaries and holiday pay is paid. However, employees are covered by the Employees’ Guarantee Fund (in Danish: Lønmodtagernes Garantifond), which will pay wages and salaries and prove claims against the bankrupt estate. Consequently, employees do not have to wait for the actual bankruptcy proceedings.

Fourth, outstanding taxes to the state are paid, which taxes suppliers are otherwise required to pay (e.g. excise duties on sugar, alcohol, etc.).

Finally, the last class of creditors covers unpaid bills and other ordinary receivables not paid according to the rules above.

If there is still money left when all the preceding classes in the bankrupt estate have been paid, interest accrued on the claims during the bankruptcy proceedings are paid first and then fines and any promises of gifts.

Within each class, the individual creditors will receive the same percentage share of the amount owed to them. This is also called dividend.

Only when all creditors in a class have received 100 percent of the amount owed to them, dividend is paid to the creditors in the next class.

Debt legally secured by charge will still be charged as agreed.

Read more about the order of priority of creditors in Section 10 of the Danish Bankruptcy Act (in Danish)

When a bankruptcy order is made, the debtor loses the right to deal freely with the money and assets he/she had when the bankruptcy court made the bankruptcy order.

To present a bankruptcy petition, you must be owed money that is not paid as agreed. The person against whom the bankruptcy petition is presented must also be insolvent – i.e. he/she is unable to pay his/her bills as agreed/ when they fall due.

If the debtor is able to pay but does not want to, instead collection proceedings may be commenced in the bailiff’s court. If there is disagreement on the debt being owed, a civil lawsuit may be commenced or an attempt of judicial mediation made.

An insolvent individual can also apply for his/her own bankruptcy.

Read about debt collection by the bailiff's court (in Danish)

Read about commencing civil proceedings (in Danish)

Read about dispute resolution with judicial mediation (in Danish)

The bankruptcy division of the district court with jurisdiction over the place where the bankrupt person resides conducts bankruptcy proceedings. In Greater Copenhagen (Copenhagen, Frederiksberg, Glostrup, and Lyngby judicial districts), however, the Maritime and Commercial Court of Copenhagen conducts bankruptcy proceedings. If the debtor carries out business activities, the address of his/her company determines the judicial district.

Find a court via address search (in Danish)

From 1 October 2021, a court fee of DKK 1,500 is payable for filing a bankruptcy petition. A petition for the bankruptcy of your own company is fee exempt.

It is very difficult to say how long a bankruptcy process takes as it depends on the individual circumstances.

It is relatively easy for the trustee to get an overview of the bankrupt estate in a case with few creditors and few assets that are easy to sell, and then the process will be quick. If there are many creditors and assets that are difficult to measure and sell, it will take longer.

The bankruptcy court appoints the trustee after having consulted the attending creditors.

The trustee must not be unfit in relation to the insolvent individual.

If one or more creditors so request within three weeks of the bankruptcy order, a so-called meeting of creditors must be held, at which meeting the creditors vote for the appointment of a trustee.

The bankruptcy court may also appoint one additional trustee.

Creditors having claims against a bankrupt debtor must send a letter with a statement of the claim to the trustee (prove their claims). Claims must be proven within four weeks of the publication of the bankruptcy order in the Danish Official Gazette (in Danish: Statstidende). The trustee prepares a list of proven claims. This is also called a register of debts and claims.

The trustee examines the proven claims, usually during a meeting at the trustee’s office. Date and time are announced in the Danish Official Gazette. Two weeks before the meeting, the register of debts and claims with the proven claims and the trustee’s recommendation of the claims can be inspected at the trustee’s office and in the bankruptcy court. For example, if the trustee disagrees with a creditor on the amount of the creditor's claim, the creditor will receive notice to this effect before the meeting.

If the creditor and the trustee cannot agree on the claim, the creditor can bring a lawsuit against the bankrupt estate. The lawsuit is heard by the bankruptcy court. A writ of summons must be submitted to the bankruptcy court within four weeks of the meeting at which the trustee examined the claim. The creditor must pay a court fee according to the provisions of the Danish Act on Court Fees in Civil Cases.

If the creditor does not bring an action before the fixed time limit, the trustee’s recommendation stands and is final.

Search in the Danish Official Gazette (in Danish)

A debtor has certain duties and rights during the administration of the bankrupt estate.

The debtor must give the bankruptcy court and the trustee access to all the information necessary for the administration of the bankrupt estate.

The debtor may not leave Denmark unless the bankruptcy court gives permission.

The debtor must inform the bankruptcy court before changing address or permanent place of residence.

The debtor is entitled to participate in all meetings of creditors.
 
Interruption of postal services means that letters and shipments to the debtor are redirected to the trustee. This will happen when the bankruptcy court finds it essential for the administration of the bankrupt estate. Interruption of postal services is an ordinary part of the administration of the bankrupt estate.

The bankruptcy court’s decision on interruption of postal services is made at a court hearing. Personal debtors must be summoned to the court hearing and given the opportunity to make representations before a decision on interruption of postal services is made. An interruption of postal services applies for three months, but the period may be extended. The interruption of postal services must be lifted when it is no longer necessary.

The trustee may open and read all letters received via the interruption of postal services unless it is perfectly obvious that they do not relate to the bankrupt estate. The trustee must inform the debtor about the time and place of the opening of letters. The debtor is entitled to be present when letters and shipments are opened. The trustee must as soon as possible hand over or send letters to the debtor if they are not related to the bankrupt estate.

The court may assign counsel to a personal debtor if deemed necessary. The court may assign counsel in connection with the hearing of the bankruptcy petition and later during the administration of the bankrupt estate.