Personal Bankruptcy in Austria in 2026: How Debt Settlement Works

If you can no longer repay your debts properly, Austria offers individuals a court-based way forward. The debt settlement procedure (Schuldenregulierungsverfahren), commonly called personal bankruptcy (Privatkonkurs), has existed since 1995 and aims to give honest debtors a genuine chance to make a fresh financial start.

At a glance

• The procedure is available to individuals who do not operate a business and are insolvent.
• The competent court is the district court (Bezirksgericht) for your usual place of residence.
• Under a payment plan (Zahlungsplan), instalments can run for a maximum of seven years.
• After 16 July 2026, a five-year assignment period generally applies to consumers in the income-stripping procedure.
• State-recognised debt advice is free of charge.

What is personal bankruptcy, and who can apply?

The Schuldenregulierungsverfahren is a court insolvency procedure for natural persons who do not operate a business. The debtor or one of the creditors can initiate the procedure.

There is no mandatory application deadline for a private individual. The 60-day deadline that applies in cases of insolvency concerns business operators only.

Common reasons for becoming over-indebted include:

• a lack of overview of income and expenditure;
• overestimating your ability to manage financial obligations;
• low or fluctuating household income;
• obligations arising from a guarantee (Bürgschaft);
• unexpected events such as illness, an accident, divorce or death.

First step: an out-of-court settlement and debt advice

Before going to court, you can try an out-of-court settlement (außergerichtlicher Ausgleich), although this is not compulsory. It can only be concluded if every affected creditor expressly agrees; nobody can be forced to accept it. It is advisable to put the agreement in writing.

If creditors waive the remaining debt after agreed payments have been made, guarantors are also released to the extent of the waiver unless the parties have expressly agreed otherwise.

State-recognised debt advice services (Schuldenberatung) provide free assistance and can also represent the debtor before the court. Their identifying mark is the federal coat of arms together with the wording “Staatlich anerkannte Schuldenberatung”. Other providers, such as credit brokers, charge for advice. Debt advice services do not provide financial support and do not assume guarantees.

Where and how does the procedure begin?

The application must be submitted to the Bezirksgericht using the mandatory official form (Formblatt). The form can be downloaded and is also available from courts and debt advice services. You can submit it online in PDF format or make a statement orally for the court record.

The process generally works as follows:

1. The court opens the procedure by order if the legal requirements are met.
2. The details are published in the insolvency register (Insolvenzdatei).
3. A first hearing (Tagsatzung) takes place a few weeks later, where the claims that have been filed are examined.

Important: you must attend hearings to which you are summoned in person. Otherwise, you may suffer procedural disadvantages. The procedure can last several months.

How much does it cost?

The procedure can begin in two ways:

• With an advance on costs (mit Kostenvorschuss): the debtor pays at least the initial costs within the deadline set by the court.
• Without an advance on costs (ohne Kostenvorschuss): stricter formal requirements must be met.

The stated costs are:

• Initial costs: between 100 and 1,000 euros.
• Minimum fee for the insolvency administrator (Insolvenzverwalter): 1,000 euros.

In both cases, an inventory of assets (Vermögensverzeichnis nach § 185 IO) is required. Without an advance, you must also apply for acceptance of a payment plan, credibly demonstrate that you can fulfil it, and request that the income-stripping procedure be opened if the plan is not established. Most debtors cannot pay the advance.

How can the procedure end?

Restructuring plan (Sanierungsplan)

This requires a quota of at least 20%. It usually runs over two years and, for non-business operators, can last a maximum of five years.

Payment plan (Zahlungsplan)

The quota corresponds to the income expected over the following three years, with instalments payable over a maximum of seven years.

Income-stripping procedure (Abschöpfungsverfahren)

There is no quota fixed in advance, and creditor approval is not required.

The necessary majority of creditors must accept a Sanierungsplan or Zahlungsplan, and the court must approve it. Once the plan has been completed, the unpaid remainder is discharged.

Under the Abschöpfungsverfahren, the attachable portion of your income must be assigned to a trustee (Treuhänder). You must also perform or seek suitable work. For consumers, the previous three-year repayment plan (Tilgungsplan) rules ceased to apply on 16 July 2026. As a general rule, a five-year period now applies. After it expires, the court decides on discharge of the remaining debts (Restschuldbefreiung). If you culpably breach your obligations, the procedure may be terminated early and the debts may remain outstanding.

What happens to contracts and public records?

After the procedure is opened, you can no longer validly enter into certain legal transactions. Existing contracts generally remain in force. Depending on the circumstances, some earlier transactions involving assets can be challenged, potentially going back as far as ten years.

Anyone can access the Insolvenzdatei free of charge. The information is generally visible for one year after the procedure has ended.

You are generally not liable for your spouse’s debts unless you accepted liability by contract, for example by signing the loan agreement, or the debts concern ordinary household transactions.

Frequently asked questions

Must a private individual apply for bankruptcy?

No. Private individuals have no obligation or deadline to apply.

How long does the income-stripping procedure last in 2026?

For consumers, the assignment period is generally five years after 16 July 2026.

Is creditor approval required?

Yes, for a Sanierungsplan and a Zahlungsplan. It is not required for the Abschöpfungsverfahren.

Is debt advice free?

Yes, if you use a state-recognised debt advice service.

Practical steps

1. List all income, expenditure, assets, creditors and outstanding debts.
2. Contact a state-recognised Schuldenberatung for free advice.
3. Consider whether an außergerichtlicher Ausgleich is realistic and obtain any agreement in writing.
4. If necessary, obtain the official Formblatt and submit your application to the Bezirksgericht for your usual place of residence.
5. Prepare the Vermögensverzeichnis nach § 185 IO and the documents required for your chosen procedure.
6. Attend every hearing to which you are summoned and follow the court’s requirements throughout the process.

This article is based on information available online and is not legal advice. Use it at your own risk. If you need professional guidance, consult a lawyer or other qualified adviser.

Source: oesterreich.gv.at