Personal insolvency: an honest guide to what it can and cannot do for you

What it is and what it is not

Personal insolvency for non-merchants is a debt negotiation procedure before a conciliation centre, regulated by the General Procedural Code. It restructures obligations and suspends collection. It does not forgive debts or automatically erase credit reports.

Eligibility requirements

• Be a non-merchant individual domiciled in Colombia.
• Hold two or more obligations owed to two or more creditors.
• Be more than 90 days overdue on obligations representing at least 50% of total liabilities.

What happens once the application is admitted

• Ongoing enforcement proceedings are suspended.
• Precautionary measures are lifted or suspended, including salary attachment.
• Creditors cannot start new judicial collection while negotiation lasts.

Realistic timelines

The law allows 60 days of negotiation, extendable by 30. In practice the full process takes three to five months from filing, depending on the number of creditors.

When it is not the best option

If you have a single creditor, if your arrears are recent, or if your capacity to pay allows a direct discounted negotiation, the out-of-court route is usually faster and cheaper. A good lawyer will tell you that before filing.