Austria has reverted to a five-year waiting period for personal bankruptcy, after a temporary three-year rule expired on Friday. The shorter timeframe, introduced in 2021 during the Covid-19 crisis, had allowed individuals to clear their debts more quickly but was never made permanent.
Private individuals must now again spend five years in insolvency proceedings before becoming debt-free. Entrepreneurs, however, will continue to benefit from a three-year discharge period, creating a clear divide between the two groups.
Debt counseling organizations have criticized the government’s decision, arguing that equal treatment would be fairer and more effective. Experts had pushed to keep the three-year rule for everyone, but their proposals were not adopted. Clemens Mitterlehner, head of the umbrella organization for debt advisory services, warned that the unequal system could raise constitutional concerns and potentially conflict with European Union law.
He also stressed that shorter procedures would reduce administrative costs and ease the burden on those affected. Women, in particular, may be disadvantaged, as they are less likely to run businesses but more often act as guarantors for debts.
Political reactions remain divided. Green Party lawmaker Alma Zadić described the three-year rule as a key reform and criticized its expiration. In contrast, creditor protection group Creditreform welcomed the return to longer repayment periods, saying the shorter system had reduced creditor recoveries by around 16 percent.
Mitterlehner expects legal challenges and has called for a revision of insolvency laws, including retroactive provisions for cases starting from July 17, 2026.
