§ 5-2. What a compulsory debt settlement contains: period and freedom from debt
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 period is five years. It can only differ where there are weighty reasons, and never exceed ten years.
- Social circumstances can support a shorter period, including age, health and family situation.
- Student debt and keeping a home with low secured debt can support a longer period.
- Once the settlement has been fulfilled, the debtor (skyldner) is free of the debt it covers, except for certain secured claims.
The text of the law (unofficial translation)
§ 5-2. Special rules on the content of a compulsory debt settlement
- there are social circumstances which mean that a normal debt settlement period would be particularly burdensome for the debtor. In the assessment, weight shall be given to, among other things, the debtor's age, health, family situation, how long the debt problems have lasted, and whether the debtor has had to sell a home (bolig) in connection with the debt settlement,
- liability under a personal guarantee (kausjon) makes up a substantial part of the debtor's debt obligations, or
- the debtor has for a long time fulfilled their obligations under an out-of-court debt settlement (utenrettslig gjeldsordning).
- the debtor has student debt of a significant size,
- the debt settlement is particularly unreasonable towards co-debtors (medforpliktet), or
- not insignificant parts of the dividend (dividende) go towards covering obligations as mentioned in § 4-8 letter g or h.
What does this mean?
This section sets the framework for a compulsory debt settlement. The settlement must comply with the rules in §§ 4-2 to 4-10. The period is five years and is counted from the opening of the debt negotiations. Weighty reasons can result in a different length. More than eight years is only possible in wholly exceptional cases, and ten years is the outer limit.
For a period shorter than five years, the assessment looks at social circumstances that make a normal period particularly heavy to bear. Age, health and family situation count, among other things, as does whether the debtor has had to sell their home or has for a long time fulfilled a settlement outside the court system. Example: The debtor has been ill for a long time and has had to sell their home. Circumstances like these can support a period shorter than five years.
For a period longer than five years, the assessment looks at, among other things, significant student debt, and whether the debtor keeps a home where the secured debt is much lower than the value determined under § 4-7. It is also assessed whether the settlement is particularly unreasonable towards co-debtors, or whether a not insignificant part of the payments goes to certain obligations under § 4-8 letter g or h.
If the debtor has completed the settlement, they are free of the debt it covers when the period ends. The exception applies to two types of secured debt regulated in the first paragraph under a and b in § 4-8. Debt that has lapsed or is not to be paid during the period cannot be collected from a debtor living outside the realm either. If anything is collected in breach of this, the debtor can demand it back.
In practice, the section is used like this: The petition (begjæring) under § 5-1 must include a proposal that complies with it, and the court (retten) confirms the proposal under § 5-4 only if it meets the requirements here. The proposal's fixed amounts and co-debtors are dealt with in § 4-2, and guarantee claims in § 4-10.
- § 4-2What a voluntary debt settlement proposal can and must contain
- § 4-7Valuation of the home and other assets you keep
- § 4-8Distribution between the creditors in a debt settlement
- § 5-1How to petition for compulsory debt settlement
- § 5-4When the district court confirms a compulsory debt settlement