Debt Discharge in Personal Bankruptcy

This article seeks to fill the gap in the Slovenian literature in the field of debt discharge as a part of the personal bankruptcy proceedings. The first part of the article presents the basic theoretical knowledge about personal bankruptcy, with an emphasis on theories of rationalizing the debt discharge proceedings. The author defines the debt discharge as a system of legal incentives in the form of a carrot, that aim to motivate the insolvent debtor to cooperate with the creditors and enables them a better repayment of their claims. Defining the right trade-off between the creditor’s rights and debtors incentives to cooperate is the single most important question of the debt discharge proceedings. The analysis of the Slovenian case law shows that courts initially had difficulties in setting and justifying the length of the probation period for the debt discharge and that the assessment of the period was influenced by criteria not regulated by the law. The final part of the paper analyses the latest amendments to the Slovenian Financial Operations, Insolvency Proceedings and Compulsory Winding-up Act ZFPPIPP-G. The author stresses that the new definition of the goals of the debt discharge proceedings, combined with the nomotechnical usage of a general clause combined with some rebuttable presumption, brings to the system additional flexibility to the court’s decision making that was non-existent until now.