How not to pay a loan in Ukraine? Write-off of bank loans

In our country, where financial stability and credit history play an important role, many people face challenges related to repayment of loans. This is influenced by various factors, both internal (high interest rates for using credit funds) and external (armed aggression of the Russian Federation against Ukraine). In this case, mounting debts create financial pressure on the lives of millions of Ukrainians. However, there is a practice that can bring relief in such situations - it is writing off the debtor's debt to the creditor. In this article, we will consider whether it is possible in Ukraine not to pay a loan during martial law and what conditions the legislation sets for writing off loans.

What will be the consequences if the debtor does not repay the debt to the creditor during the martial law in Ukraine?

In March 2022, the Verkhovna Rada adopted Law No. 2120-IX, which amended the Tax Code and began to regulate the issue of loan payments during martial law.

Analyzing this NPA, we can say that debtors who took a loan from banks received certain benefits:

• First of all, they will not be punished by fines and other types of penalties for overdue debts;
• The interest rate on the loan will not increase during the martial law in the country. One exception is the floating interest rate.

However, it is important to note that the debt on the accounts of the debtors remained the same as it was.

In addition, the KUZPB establishes general methods of writing off debts:

1. Debt restructuring - an appeal to the financial institution that issued you a loan, with the aim of granting the debtor a postponement of the fulfillment of his credit obligations under the contract;
2. Bankruptcy is a procedure according to which the debtor can declare his insolvency before the creditor and make full or partial repayment of the obligations under the contract;

It is also worth mentioning debt restructuring, which is provided for in the Law "On Consumer Credit" - a review by a financial institution of the terms and methods of repayment of a consumer loan.

What did it give in practice?

Banks and other financial institutions have reduced financial pressure on borrowers. Individuals were given the opportunity not to pay debts to creditors during the period of martial law in the country and 30 days after its end.

It should be remembered that during martial law, although creditors do not have legal opportunities to charge penalties under a credit agreement, a financial institution can enforce the debt by applying to judicial authorities.

How to legally write off debts in Ukraine?

It is clear from the provisions of Law No. 2823-IX that citizens of our country have the right to write off debts to creditors. However, there are several legal nuances that must be taken into account in order to completely cancel the debt:

• as of February 23, 2022, there should be no cases of overdue loan payments at all or by more than 7 days;
• it is necessary to prove the purpose of obtaining such a loan - the purchase or reconstruction of damaged property;
• the area of the purchased apartment does not exceed 140 square meters, and the house up to 250 square meters;
• housing, which was destroyed as a result of the armed aggression of the Russian Federation, was the only means of living.
• Similarly, the car that was destroyed served as the only mode of transport for this person.

In order for the borrower's application to be considered by the bank, it is necessary to provide all relevant documentation that confirms the authenticity and reliability of the above facts. When the financial institution makes a positive decision, the applicant will be entitled to receive compensation from the state.

If you need to cancel your debts to a creditor or need advice on how to legally default on a loan, contact the Prykhodko and Partners law office. Our team of experienced lawyers will provide all the necessary assistance in solving your question, as we have many years of experience in the field of tax and financial law. So don't delay and apply!