10 March 2025
On 15 January 2025, the Federal Council adopted the dispatch on the amendment of the Federal Debt Enforcement and Bankruptcy Act (DEBA) to introduce two new procedures to give over-indebted persons the opportunity to become debt-free again. The aim of the proposed amendment to the law is to offer these people a second chance and at the same time reduce the negative economic and social consequences of over-indebtedness.
Two new reorganisation paths
1. simplified debt restructuring procedure
This procedure is aimed at people with a regular income and enables them to partially discharge their debts. The creditors must agree to a composition that cancels part of the debt. Most of the creditors and the court must approve this plan. Creditors who do not agree are also bound by the composition.
2. reorganisation procedure under bankruptcy law
There is an alternative solution for people who are completely overindebted and cannot reach an agreement with their creditors. For three years, they must use all available funds to pay off their debts and endeavour to earn a regular income. If they fulfil these conditions, the remaining debt will be cancelled at the end of the period. Originally, a four-year term was planned, but this was shortened to three years following feedback from the consultation process.
Protective measures against abuse
To prevent abuse and protect the rights of creditors, the following restrictions are planned:
- Waiting period for renewed debt relief: Anyone who has already been relieved of debt once can only apply for reorganisation proceedings again after ten years.
- Subsequent debt repayment on acquisition of assets: If a person who has been discharged from debt subsequently acquires assets - for example through an inheritance or gift - creditors should still be entitled to them for a certain period of time.
- Debt counselling during the proceedings: The cantons are obliged to provide debtors with counselling services. The aim is to teach them how to manage their income better to remain debt-free in the long term.
Social and economic benefits
The reform should help over-indebted people to get back on their feet more quickly and thus prevent them from becoming permanently dependent on social welfare. This could also relieve the burden on the healthcare system and social insurance schemes, as over-indebtedness is often associated with psychological and physical stress.
Next steps in the legislative process
The proposed measures are not yet in force. They must first be discussed and approved in parliament. Only then will those affected be able to utilise these debt relief options.
