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A questioner asks: A year ago, judgments and executions were issued against me in favour of the creditors who filed these lawsuits. I was also subject to arrest warrants and travel bans due to these judgments, and I am currently unable to pay these amounts. My question is, I heard that there is a law called Insolvency. Does this law apply to me and can I be exempted from these debts because of this law? Please advise.

Answer: To answer such question, I would advise the questioner that:

The Federal Decree-Law No. 19 of 2019 on Insolvency supports individuals who are facing existing or anticipated financial difficulties that make them unable to settle or reschedule their debts.

The debtors will be protected at the time of insolvency from legal prosecution and decriminalise the financial obligations of the insolvent person. This protection will be kept until closure of insolvency which shall be done after the final distribution of the Debtor’s Funds to creditors. This is stated in Article 51 of the law (“During Insolvency and liquidation proceedings, no lawsuits or legal or judicial proceedings against the Debtor may be instituted or pursued in cases other than those authorised by the Decree-Law. The Court’s decision to open Insolvency and liquidation proceedings shall result in the stay of all judicial execution proceedings against the Debtor’s Funds.”)

Moreover, the issuance of the decision to open Insolvency and liquidation proceedings, as per Article 52, shall result in the stay of legal or contractual interest on the Debtor, including accrued interest or compensation due for late payment.

The law is applied to a natural person who does not carry out economic activities and is not considered a merchant so if you are a natural individual, you can file the application to the court for insolvency in the event that you cease to pay any of your debts on their maturity dates for more than fifty (50) consecutive working days as a result of your inability to pay such debts.

But this law doesn’t mean that you will be free from your debts or will not be responsible to pay these debts. As a debtor, you will be given a reasonable deadline to pay your debts according to the new circumstances.

One or more experts will be appointed by the court to settle your financial obligations. The expert will coordinate with you and the creditor to come up with a plan to settle the financial liabilities within three years based on your properties, or what you might earn.