§ 1-4. When debt negotiation must be refused

The Debt Settlement Act (Gjeldsordningsloven)·LOV-1992-07-17-99

Machine-translated from Norwegian. The Norwegian text is the one that applies. Read the original in Norwegian.Norsk English العربية Polski Українська

In brief

The text of the law (unofficial translation)

§ 1-4. Circumstances that prevent the opening of debt negotiation

The opening of debt negotiation shall be refused if the circumstances in which the debt was incurred or the debtor's (skyldner) later transactions clearly indicate that the debtor has disloyally arranged their affairs with a view to obtaining a debt settlement, or if the debtor has intentionally or with gross negligence given incorrect or misleading information to the enforcement authorities about matters of material importance to the case. The same applies if there are unresolved financial circumstances that would make carrying out a debt negotiation substantially more difficult.
The opening of debt negotiation shall also be refused if it would clearly be offensive to other debtors or to society in general. In the assessment, particular weight shall be given to whether:
  1. the greater part of the debt has been recently incurred. Prudent borrowing for refinancing (refinansiering) or for a necessary home (bolig) and the like shall be disregarded,
  2. a not insignificant part of the debt stems from criminal offences that were decided by judgment (dom) or penalty notice (forelegg) less than three years before the application (søknad) is submitted. If the debtor is clearly in a rehabilitation situation, debt negotiation may nevertheless be opened,
  3. the debtor has made transactions that would have been voidable in bankruptcy (konkurs), cf. the Creditors Recovery Act (dekningsloven) chapter 5,
  4. the debtor, in the period immediately before the application for debt negotiation was submitted, has in a highly reprehensible manner failed to meet their obligations as far as was possible,
  5. a significant share of the debtor's total debt is tax and duty debt (skatte- og avgiftsgjeld), and whether the debtor can be blamed for circumstances connected to it.
If the debtor has previously obtained a debt settlement and it has been cancelled, debt negotiation may be opened only if changed circumstances make it appear likely that a new debt settlement will be carried out. If the debtor has previously completed a debt settlement, debt negotiation may only be opened in special cases before five years have passed since the previous debt settlement was completed. In addition, weight shall be given to the fact that the debtor has had a debt settlement before when assessing whether opening debt negotiation would be offensive.
Debt negotiation for a debtor who lives outside Norway may only be opened if
  1. it is unobjectionable with regard to the clarification of the facts of the case,
  2. the debtor has no debt, or only an insignificant amount of debt, to foreign creditors (kreditorer), and
  3. the debtor does not own a home or other assets abroad of substantial value, unless it is clear that the facts of the case can nevertheless be sufficiently clarified and that this will not make the debt negotiations more difficult.
Source: Lovdata — Gjeldsordningsloven (the Debt Settlement Act) § 1-4

What does this mean?

This section says when debt negotiation must be refused, even if the debtor otherwise meets the conditions. It has four subsections, and each one deals with a separate group of circumstances.

The first subsection is about disloyalty and unclear circumstances. Negotiation must be refused if the debtor has clearly arranged things so as to obtain a debt settlement, either when the debt was taken on or through later transactions. The same applies if the debtor deliberately, or through gross negligence (very carelessly), has given the enforcement authorities misleading information about something important. Unresolved financial circumstances that make the negotiations substantially more difficult are also an obstacle.

The second subsection is an "offensiveness" rule. Negotiation must be refused if it would clearly be offensive to other debtors or to society. The law lists factors that should be given particular weight. Among them are debt that is mostly recently incurred, criminal offences decided less than three years before the application, and tax and duty debt for which the debtor can be blamed. The law also mentions transactions that would have been voidable in a bankruptcy, and that the debtor, just before the application, failed to pay in a highly reprehensible way. Loans for refinancing or a necessary home are disregarded when assessing recent debt, and a clear rehabilitation situation can mean that negotiation is opened anyway.

The third subsection concerns previous debt settlements. If a previous settlement was cancelled, changed circumstances are required that make it likely a new one will be carried out. If a settlement was completed, the time limit is five years, and within that time negotiation can only be opened in special cases. Having had a debt settlement before also counts in the offensiveness assessment. The fourth subsection applies to you if you live outside Norway. In that case, it must be unobjectionable to clarify the facts of the case, you cannot have more than an insignificant amount of debt to foreign creditors, and you cannot own a home or other significant assets abroad. The exception is when it is clear that the facts of the case can be clarified anyway.

This section goes together with § 1-2 on the scope of the Act and § 1-3 on the financial condition. The application is governed by § 2-1 and referral to the court (retten) by § 2-7, and § 5-4 deals with confirmation by the court (stadfestelse) by the district court. All of these are linked to this section.

Related sections
All sections of the Debt Settlement Act →
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