When an order to commence insolvency proceedings is issued, a period called the “interim period” begins, which is the period between the issuance of the order to commence proceedings and the issuance of the economic recovery order.
During this period, the person in insolvency process is called in legal terms “ the individual” and is required to submit a bi-monthly report every two months, which can be downloaded from the official website, in which he declares all his expenses and income for those two months.
The report must also be accompanied by supporting documents for the expenses and income – meaning that the individual must keep receipts for all his expenses, and bring pay slips each time to show his salary. Bank account statements must also be attached.
The bi-monthly reports are very important in several respects. First, they are used by the officials of the state and trustee to monitor the individual’s financial conduct, and to check that the monthly payment set is not too low. In addition, they are supposed to indicate that the individual is financially conducting himself correctly, and not incurring debts again.
The bi-monthly reports will also be the basis for the economic rehabilitation plan to be submitted to the court prior to the hearing on the economic recovery order, and therefore they can significantly influence what the individual’s coming years will look like, since the payment set in the order is the payment for the next three years.
Additionally, if the individual does not submit the reports on time, this can serve as grounds for extending the period of the monthly payment in the economic recovery order – so for example, instead of three years, the court may set four years of payments due to delays in submitting the reports or submitting incomplete reports.
There are several common mistakes made when submitting the reports, which should be avoided:
* The reports are supposed to show proper financial conduct, not show arriving at the end of each month “in the red” in terms of expenses versus income, so it is important to conduct yourself properly and declare accordingly.
* The reports are supposed to reflect the financial situation for each month, so any payment made in a given month must be declared for that month, even if it was paid for the previous month.
* It is important to submit the reports on time and attach appropriate receipts! Not just declare expenses. Collecting the receipts is an important part of the process.
After the economic recovery order is given, there is no further need to continue submitting the reports.
In summary, every case has different challenges and circumstances. Therefore, it is advisable to consult an attorney specializing in bankruptcy and insolvency in order to receive advice tailored to your personal circumstances and individual needs.