I am an individual in Bengaluru unable to repay personal loans; can I file personal insolvency?

Detailed Legal Analysis

Yes, as an individual in Bengaluru, you can file for personal insolvency under the Insolvency and Bankruptcy Code, 2016 (IBC).

The IBC provides a comprehensive framework for individuals and businesses to resolve insolvency issues, allowing debtors to either repay their debts or liquidate their assets under judicial guidance. Below are the key steps and requirements for filing personal insolvency:

• Eligibility: You must be an individual who is unable to pay your debts as they become due. According to Section 4 of the IBC, you can file for insolvency if your total debt exceeds Rs. 1,000.
• Preparation of Documents: Before filing, gather necessary documents including:
  • List of debts and creditors
  • Details of assets, including properties and bank accounts
  • Income proof, such as salary slips or tax returns
• Filing Application: You must file an application before the Adjudicating Authority, which is the National Company Law Tribunal (NCLT) under Section 94 of the IBC. The application should include:
  • Your personal details
  • Details of creditors and debts
  • Statement of affairs
• Interim Resolution Professional (IRP): Upon the acceptance of your application, the NCLT will appoint an IRP to manage your affairs during the insolvency process. The IRP will oversee the assessment of your financial position.
• Resolution Plan: You will need to propose a resolution plan for the repayment of debts, which may include restructuring or settling the amounts with creditors.
• Approval of the Plan: If the plan is agreed upon by the creditors (usually requiring a majority approval), it must be approved by the NCLT.
• Discharge of Debts: Upon successful implementation of the plan, you may be discharged from your debts, as per Section 54 of the IBC.

It is advisable to consult with a legal professional specializing in insolvency to guide you through the process and ensure compliance with all necessary legal requirements.