Debt relief requires documentation, not guessing

Debt relief is a legal process where a court can forgive or reduce your debt if you meet certain conditions. It's an option for people who have ended up in a hopeless debt situation and cannot see a way out.

To be considered for debt relief, the court thoroughly evaluates your financial situation. They look at your income, expenses, assets, and debts, and determine whether you have sufficient disposable income to live on after creditors receive their share.

The process typically starts by applying through your local court. You can also get help from a lawyer or legal aid services. Regardless of the path, solid documentation of your finances is required.

The court sets two basic requirements. You must be able to document that you are insolvent. That you neither now nor within the coming years have any prospect of being able to pay your debt. And your circumstances more broadly must support debt relief: the court weighs your age, how the debt arose, and what you've already done to pay it down.

You also need a stable income to live on afterwards, for example full-time employment, a flex job, disability pension or state pension. During the debt relief period itself you live on a fixed disposable-income allowance while you pay down the debt. That amount is set under the debt-relief order (bek. nr. 1133 of 6 July 2022 as amended), which is updated once a year, and it is not the same as the Danish Debt Agency's collection rates. The bankruptcy court fixes the amount for your specific case.

• You have acted irresponsibly with your finances
• You had the opportunity to pay the debt but failed to
• A large part of the debt arose from spending you should have avoided

The circumstances above can exclude you from debt relief. It costs nothing to apply for debt relief through the court. Sources: Domstolsstyrelsen (the Danish Court Administration) and borger.dk.

Read more about the conditions for debt relief at borger.dk.

Courts and lawyers require comprehensive documentation. The more structured and complete your documentation, the easier it is for the case worker to evaluate your application.

• Bank statements for the past 3-12 months
• Overview of all income (salary, transfers, benefits)
• Detailed overview of fixed expenses
• Documentation of all debts and creditors
• Calculation of your real disposable income

Many applicants underestimate how time-consuming it is to gather this information. This is exactly where Reelt can save you hours of work.

Preparation is crucial to increasing your chances of approval. Here are some practical tips:

• Start by gathering all bank statements for the past year
• Identify and document all your creditors
• Calculate your exact disposable income with Reelt
• Consider reducing unnecessary expenses before applying
• Seek legal aid or a lawyer experienced in debt relief

Courts look favorably on applicants who show willingness to cooperate and have their documentation in order. A structured report from Reelt can help demonstrate this.

Debt relief is typically a last resort. It's a court process with consequences for your whole finances for years. There are often other paths worth trying first:

• Payment plan (afdragsordning): A written agreement with your creditor to pay off the debt over a longer period, sometimes at a lower rate. A creditor can't force you into an agreement, but many will accept one if your proposal is realistic (Gældsstyrelsen). See Reelt's guide to payment plans →
• RKI registration: If you're listed in RKI, Denmark's register of bad debtors, the listing is normally removed once the debt is paid, or by agreement with the creditor. Without payment it's automatically deleted after a maximum of 5 years, but the debt itself remains, even after the listing disappears. (Experian (the RKI register))
• Free debt counseling: Forbrugerrådet Tænk's economic and debt counseling service offers free, independent advice to people with low income and debt, by phone, online, and in person in several Danish cities. (gaeld.taenk.dk)

Reelt can't advise you on which solution fits your situation. But a documented overview of your disposable income is useful whichever path you choose.