More than a year after the Natural Persons Insolvency Act (the “NPIA”) entered into force, the Minister of Justice issued an order bringing the Natural Persons Insolvency Register into operation. This marked the beginning of the practical implementation of the NPIA, and applications to open personal insolvency proceedings may now be filed as of 3 August 2026.

The Register is a fully automated information system through which acts and circumstances are registered and published, searches are carried out, certificates are issued confirming the existence or absence of entries in an individual debtor’s file, and copies of published acts are provided.

Personal insolvency proceedings are initiated upon an application filed by the debtor with the district court having jurisdiction over the debtor’s current address. To qualify for the opening of proceedings, the debtor must satisfy simultaneously the following conditions:

1) For more than 12 months, the debtor must have been unable to perform, in whole or in part, one or more due and payable monetary obligations with an aggregate value exceeding 10 minimum monthly wages. As of August 2026, this threshold is set at EUR 6,202;

2) The debtor must be acting in good faith - the NPIA exhaustively specifies the circumstances in which a debtor is not deemed to be acting in good faith. For example, a debtor is considered to be acting in bad faith if the debtor:

·         Has been convicted of any of the offences specified by law, including certain offences against the financial, tax or social security system, unless the debtor has been rehabilitated;

·         Has disposed of assets of significant value without consideration during the preceding three years or after filing the application;

·         Although capable of working, has failed, without valid reasons, to engage in employment or another income-generating activity during the preceding year;

·         Has intentionally obstructed the court or the trustee in examining, safeguarding or identifying the debtor’s assets.

3) The debtor must not have filed a previous application under the NPIA in proceedings that concluded with a final court decision or were terminated due to a finding that the debtor had acted in bad faith.

It should be noted that the NPIA does not apply to obligations arising from a person’s activities as a sole trader or entrepreneur, including the carrying on of a business, trade or liberal profession.

The following documents must be enclosed with the application to open the proceedings:

1) A declaration in the approved form concerning the debtor’s civil and family status, the absence of grounds for a finding of bad faith, the debtor’s assets, creditors and outstanding obligations, any pending court, arbitration and enforcement proceedings, and any payments made during the preceding 12 months whose value exceeds one minimum monthly wage;

2) Documents evidencing the declared circumstances concerning the debtor’s assets, income and obligations to creditors;

3) Statements for accounts held with banks and other payment service providers;

4) A repayment plan;

5) Evidence that the debtor has notified the National Revenue Agency of the intention to initiate the proceedings;

6) Evidence of payment of the state fee of EUR 10.

Where the statutory conditions are satisfied, the court issues a decision for opening the insolvency proceedings and appointing a trustee. A special procedure applies where the debtor’s assets are insufficient to cover the initial costs of the proceedings.

Following the opening of the proceedings, the debtor may not, without the trustee’s authorization, enter into new transactions involving the management of or disposal of the debtor’s assets, or make payments. An exception applies to current obligations relating to the debtor’s basic living needs, up to the amount determined by the court. Transactions entered into in breach of this restriction are void as against the creditors, and their execution results in the debtor being deemed to have acted in bad faith.

A central element of the proceedings is the preparation and adoption of a repayment plan for the debtor’s obligations. The plan may provide for the deferral or rescheduling of payments for a period of up to three years, the partial or full forgiveness of obligations, and other acts and transactions involving the debtor’s assets aimed at satisfying the creditors.

If no repayment plan is proposed within the statutory period, or if the proposed plan is not admitted for consideration by the creditors’ meeting or is not approved by the court, the court declares the debtor insolvent and orders the realization of the assets included in the insolvency estate.

Where no plan has been approved and the debtor’s assets have been realized, the creditors’ unsatisfied claims are discharged upon the entry into force of the decision terminating the proceedings due to exhaustion of the insolvency estate, provided that the debtor has paid the costs of the proceedings and has continued to act in good faith. The obligations that are not discharged include, among others, fines, liabilities arising from tort and statutory maintenance obligations, obligations arising after the opening of the proceedings, and claims secured by a mortgage or pledge, to the extent that the security has not been realized to satisfy the creditor.

The legal mechanism outlined above, whose practical operation is now possible through the Natural Persons Insolvency Register, is significant for both debtors and their creditors. The public nature of the Register provides businesses with an additional tool for assessing risk when entering into transactions with individuals, extending credit, and managing and collecting receivables. At the same time, since the proceedings offer good-faith debtors an opportunity for a financial “fresh start” that may be used only once, it is essential that the statutory conditions for opening the proceedings and the related legal consequences be assessed before an application is filed.

This article has been prepared for and is part of the Legal Digest issued by Penkov, Markov & Partners. The publications therein do not constitute legal advice and are not binding. Penkov, Markov & Partners reserves all rights to this material, and any distribution thereof is subject to the prior written consent of the law firm.