Differentiation

Enforcement of unsecured debt

Creditors can enforce debts against persons not registered in the commercial register. In this case only such assets of the debtor are seized and liquidated as are necessary to satisfy the creditor.

Multiple creditors can take part in such action. Debt enforcement against persons not registered in the commercial register doesn’t result in the total liquidation of all the debtors assets and also not in the distribution of the resulting cash amongst all creditors.

Enforcement of secured debt

The asset that is to be seized and liquidated to satisfy the creditor is determined in advance by the parties in the agreement in which the debtor provides a certain asset or assets as collateral against the debt.

The creditor of the secured debt takes precedence in the proceeds of the liquidation of the collateral. Any excess is distributed amongst other creditors who initiated enforcement action.

Bankruptcy

Creditors can force a debtor with unpaid due debts into bankruptcy if they file a bankruptcy action in the bankruptcy court. This procedure is only available against persons and companies registered in the commercial register.

As a result, all debts become due immediately and all creditors participate. All assets of the debtor are liquidated to satisfy all debts.

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