Personal Bankruptcy Step by Step

1. Who debt relief is for and what the conditions are

Debt relief (commonly known as personal bankruptcy) can be proposed by any individual, today including entrepreneurs, provided they meet four basic conditions of the Czech Insolvency Act:

• ✓you have at least 2 creditors and monetary obligations more than 30 days overdue
• ✓you are unable to repay these obligations, you are insolvent or insolvency is threatening you
• ✓you pursue debt relief with honest intent, meaning you conceal or misrepresent nothing to the court or the insolvency trustee
• ✓you are able to pay, each month, at least the insolvency trustee’s fee and out-of-pocket expenses (after debt relief is approved, CZK 1,089 including VAT for an individual, CZK 1,633.50 for spouses) plus an equal amount to unsecured creditors, the so called 1+1 rule

Since the amendment to the Czech Insolvency Act took effect on 1 October 2024, the former requirement of a minimum percentage of creditor satisfaction no longer applies. Debt relief uniformly lasts 3 years for everyone, whether you repay 10% or 90% of your debts over that time. If you wanted to go through debt relief again after already having completed it once successfully, you must wait 12 years from the previous debt relief, otherwise the court would either refuse to allow repeated debt relief or you would have to repay over a full 5 years.

2. Who may draft the debt relief petition

The Czech Insolvency Act deliberately limits who may draft and file a petition for the approval of debt relief on your behalf. This protects you against so called debt relief companies, which used to charge thousands of crowns for filling out a form with no guarantee of quality. Today, only the following may draft and file the petition:

• ✓an attorney
• ✓a notary
• ✓a judicial enforcement officer (except where they are themselves conducting enforcement proceedings against you or your spouse)
• ✓an insolvency trustee
• ✓an accredited person, typically a non-profit organization authorized by the Ministry of Justice

The fee for drafting and filing the petition is fixed by law at CZK 4,000 plus VAT (CZK 4,840) for an individual and CZK 6,000 plus VAT (CZK 7,260) for a joint petition by spouses, regardless of which of the persons listed above prepared it. No one may demand this fee from you in advance: it is claimed only during the insolvency proceedings as a claim against the estate, meaning it is paid preferentially from your instalments. An accredited person, by contrast, is not entitled to charge any fee at all, drafting the petition is free of charge for you.

3. How debt relief proceeds step by step

• 1.The insolvency petition combined with the petition for approval of debt relief is filed with the regional court competent for your place of residence, on the prescribed form, with an overview of your assets, income and all obligations. Filing it opens the proceedings and the matter is published in the Insolvency Register.
• 2.The decision on insolvency and the approval of debt relief is issued by the court, provided the petition meets the statutory conditions. At the same time it appoints an insolvency trustee, who will monitor your income and assets throughout the debt relief period.
• 3.Approval of the method of debt relief, for the vast majority of debtors, means debt relief through a repayment schedule combined with monetization of the estate: each month a deduction above the protected amount is taken from your wages or other income, and any assets beyond ordinary household furnishings are monetized for the benefit of creditors. Reasonable housing can, in many cases, be protected as so called protected housing, provided its value does not exceed the statutory limit.
• 4.3 years of performing the repayment schedule: during this period you pay the deductions to the insolvency trustee, who distributes them among the creditors and to their own fee. Throughout debt relief you must actively seek and maintain suitable income, otherwise you risk having debt relief cancelled.
• 5.Discharge from the remaining debts is pronounced by the court after you have duly completed the repayment schedule (Sections 413 and 414 in conjunction with Section 412a of the Czech Insolvency Act). From that moment, the remaining creditors can no longer enforce their claim against you, subject to the exceptions described below.

If you substantially breach your duties during debt relief (you stop paying, conceal income, refuse to cooperate with the trustee), the court may now choose to extend the repayment period instead of cancelling debt relief. Full cancellation of debt relief therefore happens less often than before, but the risk does not disappear entirely.

The creditors’ meeting, which used to be routine in debt relief, does not take place at all in most cases today. The court decides on approving the method of debt relief based on written submissions from the insolvency trustee, and only schedules a hearing where necessary, typically in a dispute over the amount of a claim or over the honesty of the debtor’s intent.

4. What debt relief means in practice

Entering debt relief fundamentally changes your day to day financial life. The most important effects are:

• ✓you keep only the protected amount, in 2026 a basic CZK 14,101.50 per month increased by CZK 3,525.38 for each dependent. You can find the exact calculation based on your wage and number of dependents in our protected amount calculator
• ✓the entire proceeding is public in the Insolvency Register, where anyone (a potential employer, landlord, or business partner) can verify that you are in debt relief
• ✓taking on new, disproportionate debts is not advisable, and the insolvency court may treat it as a breach of the debtor’s duties or as evidence of dishonest intent
• ✓you must inform the insolvency trustee and the court without undue delay of any change of employment, residence, or income

Your employer will generally learn about the ongoing debt relief, because the insolvency trustee sends them instructions for calculating wage deductions. This is not, on its own, grounds for dismissal, and in practice it does not bother the vast majority of employers, it is just an extra administrative step.

As a rough guide: with a net wage of CZK 30,000 and one dependent, after deducting the protected amount in 2026 (CZK 14,101.50 plus CZK 3,525.38 for the dependent) you are left with roughly CZK 12,373 to be divided. This amount is further split into thirds: two thirds, roughly CZK 8,249, go toward the insolvency trustee’s fee and satisfying creditors, and one third, roughly CZK 4,124, stays with you on top of the protected amount. The exact figure varies depending on the wage and number of dependents, so I always recommend an individual calculation.

5. What debt relief does not forgive

Discharge from the remaining debts under Section 416 of the Czech Insolvency Act does not apply to all obligations. Even after successfully completing debt relief, you must pay in full, in particular:

• ✓statutory child support, which is additionally satisfied preferentially in insolvency proceedings, as a claim ranking equally with claims against the estate
• ✓damages caused by an intentional breach of a legal duty
• ✓compensation for personal injury
• ✓monetary penalties and other property sanctions imposed in criminal proceedings for an intentional criminal offense

A creditor may continue enforcing these claims after debt relief ends, including through enforcement proceedings. If your debts include unpaid child support or damages, I recommend discussing with an attorney, already while preparing the petition, how to settle this part of the debt alongside the debt relief for your other obligations.

6. Life after debt relief and when it is time for an attorney

Once the discharge from the remaining debts becomes final (Section 414 of the Czech Insolvency Act), enforcement proceedings for debts covered by debt relief are stopped, and you no longer owe the remaining debts to the participating creditors. The record of the insolvency proceedings remains in the Insolvency Register even after it ends, which some banks or landlords may take into account when assessing creditworthiness.

If you are married, debt relief will usually also affect the matrimonial community property. A debt arising during the marriage is generally considered part of the matrimonial community property regardless of which spouse signed the contract, so the insolvency trustee can also reach assets belonging to that community property. Spouses therefore often choose a joint debt relief petition, which simplifies matters and also works out cheaper on the petition drafting fee.

I recommend a consultation with an attorney right at the start, before filing the petition, if:

• ✓you own real estate or other significant assets and want to know what debt relief will protect
• ✓your debts include child support, damages, or a claim from a criminal offense, i.e. obligations that are not forgiven
• ✓you run, or used to run, a business and are dealing with a combination of personal and business debts
• ✓the insolvency trustee or a creditor is already questioning your honest intent

Frequently asked questions about debt relief

Who will handle your case

Ing. Mgr. Tomáš Beneš

Attorney registered with the Czech Bar Association, based in Prague.

Law degree from Charles University. I focus on business law, real estate and employment disputes. I handle every case personally, no assistants.

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