As indicated by Beltrán Gómez (2015)[1], the issuance of this new regulation was primarily driven by the State's need to intervene in the economic problems of its citizens and to provide for the possibility that, when they fall into a situation of insolvency, even if they are not merchants, they may have and generate alternatives for fulfilling their obligations to their creditors.
In this regard, Article 569 of the Code of Civil Procedure established the admissibility of the creditors' meeting, according to which, said proceeding shall be initiated when the non-merchant debtor is in a state of insolvency, which may be voluntary, when promoted by the debtor himself, or compulsory, when initiated by any of the creditors.
The insolvency proceeding for non-merchant natural persons in Colombia, despite currently being governed by a recent regulation, such as the General Code of Procedure, issued by Law 1564 of 2012, has had significant antecedents that managed to consolidate it and give it the importance it currently holds in the country.
However, this provision was repealed by Law 222 of 1995, which issued a new regime for bankruptcy proceedings, which did not exclude non-merchant natural persons, and which consisted of a composition or an agreement for the recovery of the debtor's business; or a liquidation proceeding of the assets comprising the debtor's estate.
Subsequently, through Law 1116 of 2006, a novel business insolvency regime was established in the country, which entirely repealed the regime of bankruptcy proceedings contained in the aforementioned Law 222 of 1995, now expressly excluding non-merchant natural persons, as indicated in numeral eight of its Article 3.
Thus, non-merchant natural persons were left without the possibility of initiating a bankruptcy proceeding in order to fulfill their obligations and reorganize economically. For such a situation, as indicated by Piedrahita Alarcón (2015)[2], it was necessary for the legislature to promote new regulations focused on the protection of non-merchant natural persons in matters of insolvency.
The foregoing led to the issuance of Law 1380 of 2010, which established the insolvency regime for non-merchant persons, granting the non-merchant natural person debtor the ability to avail themselves of a legal procedure for negotiating their debts in an extrajudicial conciliation hearing, and the execution of an agreement with their creditors to establish a realistic and accessible term and manner for fulfilling their obligations.
However, this regulation was declared unconstitutional by the Constitutional Court through Judgment C-685 of 2011, due to errors in the procedure during the legislative process in Congress, since an essential requirement for the meeting of congressmen outside the ordinary legislative calendar was omitted, that is, it was processed in a setting that did not meet constitutional or regulatory requirements, therefore the session held is null and void, and the acts generated by virtue of it lack validity, including the approval of the reconciled version of the bill in question, being for that reason unconstitutional.
Thus, the country was again left without a legal procedure for the insolvency of non-merchant natural persons, with some provisions of Law 550 of 1999, which apply to territorial entities, and of the aforementioned Law 1116 of 2006, which apply to companies and merchant natural persons, remaining in force in matters of bankruptcy and insolvency.
Despite this, the country's most prominent procedural lawyers were promoting a project to completely reform the old Code of Civil Procedure, in order to continue along the path of orality encouraged at that time, and to have greater clarity on civil and commercial procedures, which led to Congress issuing the new General Code of Procedure through Law 1564 of 2012, which, in addition to repealing the previous Code and organizing procedures, established a series of procedures for the insolvency of non-merchant natural persons, set forth in Articles 531 to 576.
Therefore, any person, even if not a merchant, may negotiate their debts through an agreement with their creditors; validate the private agreements they have entered into with them; and liquidate their assets. These procedures, when dealing with debt negotiation and validation of private agreements, may be heard by the conciliation centers of the debtor's domicile, and when disputes arise by virtue of these procedures, jurisdiction shall lie with the municipal civil judge of the debtor's domicile or where the aforementioned procedures are carried out.
Thus, non-merchant natural persons have an alternative for negotiating their debts, allowing them to fully comply with their obligations, which generates an environment of legal certainty, both for the debtor, who will have certainty about the procedures to follow when they have incurred in the grounds for cessation of payments of their obligations; and for creditors, who will know exactly that their payment will follow a procedure supervised by the State in order to recover what is owed.
[1] Beltrán Gómez, D. F. (2015). Insolvency of Non-Merchant Natural Persons under the General Code of Procedure: Comparative Study with Law 1116/2006. On Requirements and Conditions. (Undergraduate thesis, Universidad Católica, Colombia). Retrieved from https://repository.ucatolica.edu.co/bitstream/10983/13753/4/TESIS%20DIEGO%20-%20%202016.pdf
[2] Piedrahita Alarcón, E. (2015). Insolvency Law for Non-Merchant Natural Persons: Analytical Study Based on Law 1116 of 2006. Differences, Similarities, and Limits. (Undergraduate thesis, Universidad Católica, Colombia). Retrieved from https://repository.ucatolica.edu.co/bitstream/10983/2158/1/TRABAJO%20DE%20GRADO.pdf