§ 1-3. Financial condition for debt settlement (gjeldsordning)

This section sets the financial condition for debt settlement. You must be "permanently unable" to meet what you owe. The question is whether it looks as though you will not manage to pay everything within a reasonable framework.

The law explains the term with two alternatives. The first is that you will not manage to pay all your debts within a period of time that is reasonable for you. What is reasonable depends on the kind of obligations involved and on the situation otherwise. The second is that you can only pay everything at an unreasonable sacrifice, meaning it would demand a disproportionate amount from you. One of the alternatives is enough, since they are joined by "or".

A made-up example: a debtor sees that the debts will take a very long time to pay off, even if all spare income goes to the creditors (kreditorene). In that case, the circumstances point towards the condition being met. A debtor who can pay everything within a reasonable time, without sacrificing more than is reasonable, does not meet the condition.

This condition is only one of several. Who the Act applies to is set out in § 1-2, and circumstances that can stop a case even if you are permanently unable to pay are set out in § 1-4. The purpose in § 1-1 is to help people with serious debt problems. The municipality's (kommunens) help towards an out-of-court solution is set out in § 1-5, and § 1-6 says that debt settlement does not prevent support under the Social Services Act (loven om sosiale tjenester). In addition, § 5-4 on confirmation by the court (stadfestelse) by the district court (tingretten) is linked to this section.