A claim for bankruptcy is filed in the District Court where you have your legal domicile or permanent residence.
Data must be submitted in 2 copies. At Reykjavík District Court, 1 copy is sufficient.
The District Judge assesses whether you meet the requirements for bankruptcy.
If the judge deems the conditions for bankruptcy to be met, a hearing is called.
You must attend the hearing or a lawyer with a mandate on your behalf. Others cannot attend on your behalf.
If you or your lawyer do not show up, the claim is considered withdrawn.
Upon a bankruptcy order, a separate legal entity called a bankruptcy estate is created. A Trustee is appointed and has custody of the bankruptcy estate.
It usually takes several months for the trustee to complete the exchange.
The trustee makes decisions about how the property and rights of the estate will be disposed of.
A person is allowed to keep assets that are not subject to confiscation, for example, movable assets to maintain a simple home, necessary movable assets due to disability or ill health, or items used for employment.
The trustee can terminate rental agreements
Bankruptcy can end with the distribution of funds to creditors if there are assets in the estate, or without allocation if there are no assets.
Debts that cannot be paid at the time of the exchange expire (lapse) when 2 years have passed since the end of the exchange, unless the statute of limitations is terminated.
