Bancruptcy of individuals
On this page
General
Bankruptcy is an enforcement proceeding in which the value of a debtor’s assets is distributed to pay the debtor’s debts. The District Court must issue a ruling declaring the bankruptcy and authorizing the bankruptcy proceedings. If no assets are available, the bankruptcy proceedings may be concluded without any payment being made toward the debts.
A person with legal domicile in Iceland may file a bankruptcy claim on their own estate. Personal bankruptcy is a decisive decision and has various effects.
Financial problems can often be resolved without bankruptcy, and it is important to seek financial advice before making a decision.
The debtor's representative has compiled a brochure on personal bankruptcy (.pdf in Icelandic).
Requirements for filling for bankruptcy?
A debtor may petition for bankruptcy proceedings if they are unable to meet their obligations to creditors in full when the debts fall due, and it is not considered likely that their financial difficulties will be resolved in the near future.
Bankruptcy process
A request for bankruptcy proceedings must be sent in writing to the district court where the debtor lives. Certain documents must be included with the request.
When the claim is accepted, a liquidator is appointed. The bankruptcy process usually takes several months.
When the exchange is complete, a two- year expiration period begins.
Debts generally become time-barred two years after the bankruptcy proceedings are completed, unless action is taken to interrupt the limitation period. This two-year limitation period does not apply to student loans.
Next: Filing for bankruptcy
Service provider
The Debtors' Ombudsman