Austria: Bankrupcty Regime For Private Individuals

Last Updated: 28 August 2015
Article by Gergely Szalóki

Most Read Contributor in Austria, September 2019

The Hungarian Parliament has adopted a new legal regime setting out debt settlement procedures for private individuals.  The act will enter into force on 1 September 2015, and will have a huge impact on the business of banks and financial undertakings in Hungary.

The new regime is mainly aimed at non-performing housing loans; however, it does not exclude any kind of debt that is owed by a private individual who is a Hungarian tax resident.  The private individual debtor may initiate the debt settlement procedure under the following conditions: (i) the aggregate amount of the debtor's outstanding debts exceeds HUF 2 million (approx EUR 6,600), but does not exceed HUF 60 million (approx EUR 200,000), (ii) the debts exceed the value of the debtor's assets (including the aggregate income expected in the upcoming 5 years), but do not exceed double the value thereof, (iii) at least 80% of the debts are acknowledged or undisputed by the debtor, (iv) at least one debt is overdue over 90 days, and the amount of such debt exceeds HUF 500,000 (approx EUR 1,650), (v) there are not more than 5 subordinated debts (i.e. the creditor is (x) the co-debtor or the security provider, (y) a close relative of the debtor or (z) a company in which the debtor or the co-debtor is an executive officer or has at least 5% interest), (vi) the debts include at least one consumer loan debt, or a loan that relates to the debtor's private business, and (vii) none of the debts stems from an enforceable court decision whereby the liability of the debtor was based on 'piercing the corporate veil'.

The debtor may initiate debt settlement both outside and within the scope of a court procedure.  If a financial institution (as main creditor) has provided a housing loan to the debtor (by way of mortgage backed loan or financial leasing), the debtor must first initiate out of court procedures by delivering a written notice to the main creditor.  The out of court procedure is coordinated by the main creditor.  The procedure aims at reaching a debt settlement arrangement.  The main creditor must prepare the draft of the arrangement together with the debtor, and the debtor delivers the draft to the other creditors and obligors (if any). All creditors must agree on the debt settlement arrangement within 120 days from the receipt of the application (90 days if only the main creditor is concerned as creditor). During the procedure, creditors may enforce their claims only within the debt settlement procedure, and may not terminate the loan agreement.  Nevertheless, the creditors do not have to keep the loan facilities available or to disburse loans.

For the sake of the court procedure, a new authority, the Family Bankruptcy Service, will be set up.  The debtor must apply for debt settlement at the Family Bankruptcy Service which will forward the application to the court.  The Family Bankruptcy Service will appoint a family administrator who will be in charge of the procedure.  The family administrator will have certain powers over the assets of the debtor (e.g. the debtor may have only one bank account, and only the family administrator will have powers of disposal over such account).  The family administrator prepares the debt settlement arrangement (together with the debtor), over which the creditors decide by voting.  A simple majority is required; however (i) the creditors are classified and each class has a different voting multiplier (e.g. a privileged creditor is allocated 20 votes after each HUF 20,000 claim (i.e. a HUF 1 million privileged claim gets 1,000 votes), whereas subordinated creditors receive only 1 vote per HUF 20,000 (i.e. a HUF 1 million subordinated claim gets only 50 votes)) and, (ii) the debtor, the co-debtor and the main creditor have veto rights.  The debt settlement arrangement must then be approved by the court, and it is binding on all creditors.  If no agreement is reached within 150 days, the family administrator will start to prepare the 'debt settlement plan', which aims at the liquidation of certain assets of the debtor and distribution of the proceeds among the creditors.

Although the act enters into force on 1 September 2015, the debt settlement procedure will be available only to certain debtors (mostly those having FX-based housing loans).  Hungarian financial institutions will have to adapt their internal procedures with haste in order to perform the tasks under the new regime. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions