Economic Resilience: Bankruptcy

We are going to go over the procedure of bankruptcy in Switzerland and compare the culture of it to America, how it is regarded, its purpose and effects. In Switzerland bankruptcy is badly regarded considered a failure. It is declared when a legal entity or a person as an individual enrolled in the Commercial Register has not paid a debt or has stopped paying off a debt. A single unpaid debt of a humble amount could lead to a bankruptcy, a creditor can appeal to court for the bankruptcy of the legal entity or person enrolled in the Commercial Register. The debtor himself may also appeal to court for a bankruptcy when their position is compromised.

After bankruptcy is declared the Commercial Registers Office is notified and the court orders to start the bankruptcy proceedings and demands the creditors to file their claims. The bankruptcy is published in the official gazette of the affected canton, and in the Swiss Official Journal of Commerce. The bankruptcy office makes a list of the assets to seize and sell to pay off the creditors.
If there are no assets that can be sold, the court closes the bankruptcy proceedings, unless a creditor files a demand within 10 days for a continuation of the proceedings. In this case the office of bankruptcies provides the creditor with a certificate of loss, confriming the amount owed to them and can be used in possible future procedures.
Bankruptcy in Switzerland can be very tarnishing to one’s personal and professional reputation as it is regarded an inability to manage money, pay bills on time, an overall lack of organsation and responsibility. It can and will most likely affect one’s professional live as far as to obstruct further employment.

In America Bankruptcy laws were written to help people whose finances crumbled, an opportunity to start over. Whether it was a series of bad decision making or an unfortunate economic environment, the system wants to give a second chance to businesses and individuals that failed the first time. Although bankruptcy is a second chance it does affect credit scores and one’s limit one’s ability to manage their money, it may prevent delay foreclosures and other legal actions for creditors to collect debt. Even with its consequences bankruptcy exits to discharge people who do not have the capital and assets to pay off the debts they have incurred.

It is almost as if Swiss laws favour the creditor and America’s laws favour the debtor. Unfortunately with the recession aggravated/caused by the pandemic a lot of people are going to lose their employment and entreprises, this will cause debt due to the inability to afford their daily life as they were unable to go to work and receive an income. A lot of people are going to have to file for bankruptcy which is why it has to be differently regarded in countries such as Switzerland that shame those who are late on their bill payments. To overcome a bankruptcy and have the courage to try again is an action of economic resilience.

Questions for further study:

  • Do you personally view bankruptcy as a failure?
  • Will the coronavirus change the Swiss cultural perception of bankruptcy into something more positive?
  • Due to the higher rate of bankruptcy will the Swiss laws of bankruptcy change to favor the debtor rather than the creditor ?

Sources:  (E) (E) (D)

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