Bankruptcy of individuals in Russia: Features of the procedure, nuances and risks

Krympress reports:

Bankruptcy in Vladivostok And in other regions of Russia, it becomes an increasingly relevant topic against the background of the growth of the population of the population. More and more citizens are faced with a situation where debt obligations become excessive, and attempts to agree with creditors do not lead to a result. In this case, bankruptcy procedure can help. However, it is important to understand that it is not a universal decision and is accompanied by a number of legal and practical features.

What is the bankruptcy of an individual

Bankruptcy of an individual is a judicial procedure for recognizing a citizen to fulfill monetary obligations to creditors. The process is regulated by Federal Law No. 127-ФЗ “On Insolvency (Bankruptcy)”, as well as a number of by-laws and clarifications of court instances.

Unlike legal entities, a citizen does not cease to exist after bankrupt. The purpose of the procedure is to balance the interests of the debtor and creditors: to write off debts that a person is not able to pay off, but at the same time as much as possible to ensure the return of possible funds.

In what cases is the procedure applied

The bankruptcy procedure can be initiated in the following situations:

Voluntary bankruptcy

A citizen himself can apply to the arbitration court with a bankruptcy statement if:

• The total amount of its debts exceeds 500,000 rubles;
• Payments for obligations are not fulfilled for more than 3 months in a row;
• The citizen does not have the possibility of debt restructuring or other methods of resolving the situation.

However, even with debts of less than 500,000 rubles, a citizen may apply if the impossibility of further debt service is obvious.

Forced bankruptcy

Bankruptcy may be initiated at the request of the creditor or tax authority, if:

• There is a court decision on debt collection;
• The writ of execution is not executed, and the debtor does not have sufficient property;
• The amount of debt exceeds the threshold established by law.

The creditor may submit an application to the arbitration court to declare the debtor bankrupt by providing evidence of insolvency.

Stages of bankruptcy procedure

The process of bankruptcy of individuals consists of several stages:

Preparation of documents

To submit an application to the arbitration court, a citizen collects a package of documents, including:

• passport;
• Information about income and property;
• bank statements;
• debt information;
• documents from the Federal Tax Service, PFR, banks and MFIs;
• Confirmation of the impossibility of repayment of debt.

Application and initiation of the case

The application is submitted to the arbitration court at the place of registration. After its adoption, the court sets the date of the meeting and the temporary financial manager, who will accompany the case.

Consideration of the case and the introduction of the procedure

The court may introduce one of the procedures:

• debt restructuring — if a citizen has a stable income and chances of partial repayment;
• sales of property — if it is not possible to restructure the debt, the property of a citizen is realized for settlements with creditors;
• The settlement agreement — at any stage, the parties may agree on voluntary settlement.

Completion of the procedure

Upon completion of all stages, the court makes a decision to write off debts (with the exception of obligations that are not subject to write -off, for example, alimony, compensation for health harm, fines, etc.). The citizen receives the status of the exempted from obligations.

Alternative methods — extrajudicial bankruptcy

Since 2020, in Russia, extrajudicial bankruptcy has appeared, intended for citizens with small debts. Conditions:

• debt amount from 50,000 to 500,000 rubles;
• lack of open enforcement proceedings and income;
• The completion of all enforcement proceedings due to the lack of property.

The procedure is carried out through the MFC at the place of registration, without a court and a financial manager. The process lasts 6 months and, subject to conditions, also leads to debt to write off.

Submarine stones and risks of the procedure

Despite the attractiveness of bankruptcy as a way to get rid of debts, the procedure has a number of restrictions and consequences:

• Vacore sale: the debtor loses the ownership of property, with the exception of only housing, necessary clothing, household appliances and some other items.
• restrictions: within 5 years, a citizen is obliged to indicate the fact of bankruptcy in the execution of loans; For 3 years, he cannot occupy leading positions in organizations.
• Moral and social factor: for some citizens, the very fact of recognition of insolvency is important.
• Incorrect submission of documents or hiding information can lead to a refusal to write off debts.
• Difficulties with restructuring: if a citizen has income, the court can initiate restructuring, not a write -off.

It is also worth considering that in case of detection of fictitious bankruptcy (for example, deliberate alienation of property), criminal consequences may occur.

To whom to contact

Proper support of the bankruptcy procedure requires legal knowledge and experience. You can contact:

• Carbitration manager — they are appointed by the court, but you can choose the SRO in advance and indicate it when submitting the application.
• Würidic companies specializing in the bankruptcy of individuals — they will help to collect documents and draw up a competent statement.
• In the MFC — if the extrajudicial procedure is planned (subject to conditions).

Important: do not trust the doubtful proposals of “write off debts in 3 days”, it is necessary to act only within the framework of the law and accompanied by qualified specialists.

Experts note: the bankruptcy of individuals is a complex, but legal way to get rid of excessive debts. In the conditions of an unstable economic situation and the growth of debts, this procedure becomes more and more in demand. However, before its start, it is worth carefully analyzing your finances, evaluating the consequences and possible restrictions, and consult with professionals.

For residents of the regions, including Vladivostok, bankruptcy can be a step towards restoring financial stability and the beginning of a new stage of life without debts. The main thing is to consciously approach the issue, not hide property, observe laws and act within the framework of the legal field.

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