Write off a loan for destroyed property (apartment, car, equipment)

Writing off a loan for destroyed property (apartment, car, equipment) became possible thanks to legislative initiatives related to the protection of the rights of citizens who suffered from military actions. In particular, the new draft law No. 7441-1, adopted by the Verkhovna Rada of Ukraine on December 1, 2022, provides a mechanism for writing off credit obligations for individuals whose property, such as housing, cars or equipment, was destroyed as a result of hostilities.

The essence of this procedure is that borrowers can receive a suspension or a complete write-off of the loan if their property is destroyed or located in temporarily occupied territories. For this, it is necessary to provide supporting documents certifying the fact of destruction or loss of property. Also, this law allows to avoid court proceedings and settle the issue of write-off of loans out of court, which greatly simplifies the procedure for the victims. This decision is aimed at easing the financial burden for citizens who lost their property due to the war, in particular those who had loans for an apartment or a car.

If you have lost documents for property destroyed by war, there are ways to recover documents or prove ownership of the property. You can learn more about this in the article: What to do if there are no documents for property that was destroyed as a result of military actions?

In order to record the damage caused by the war, it is important to correctly record the condition of the damaged property. You can learn more about the fixation procedure at the link: Fixation of damage (damages) caused by war.

What is the procedure for banks to grant a deferral for the payment of credit debt?

The procedure for granting a moratorium on the payment of credit debt involves several stages that must be completed by the borrower. In the conditions of martial law in Ukraine, banks provide borrowers with the opportunity to temporarily suspend payments on loans for real estate, such as apartments or houses. This applies to both the principal amount of the debt and interest, fees and other additional payments.

To exercise the right to postponement, the borrower must perform the following steps:

• Submitting an application to the creditor:

The borrower or his representative must sign the application on suspension of payments and submit it to the creditor in the original. In the application, it is necessary to indicate reasons that meet one of two conditions: the property is located in a temporarily occupied territory or in a war zone, or it is damaged as a result of war and needs repair.

• Providing supporting documents:

The borrower must submit documents confirming the damage to the property to the lender. These can be original documents or notarized copies. If the property is damaged, you must provide an assessment of the damage or a certificate of the need for major repairs or reconstruction.

• Deadlines for submitting documents:

Supporting documents must be submitted within 90 days after the territory where the property is located is removed from the list of temporarily occupied or combat zones. This list is determined by the Cabinet of Ministers of Ukraine.

• Recovery of payments:

If the borrower does not provide confirmation within the specified period, the creditor may demand the restoration of loan payments that existed as of February 24, 2022.

• Resumption of loan payment after compensation:

Loan payments are resumed from the moment the borrower receives compensation from the state for damaged property. If the compensation has not arrived, the borrower must begin payments no later than 180 days after the end of martial law. At the same time, interest and other payments accumulated since February 24, 2022 are not subject to payment by the borrower - they will be reimbursed at the expense of the aggressor state.

• Notification of the creditor on receiving compensation:

After receiving compensation, the borrower must notify the creditor of this fact within 10 working days. If the borrower does not do this on time, he will be forced to pay double interest for the period of delay.

Necessary conditions for suspension of payments and cancellation of loans for housing and cars damaged during the war

In order to take advantage of the right to suspend payments or write off loans for housing and cars damaged during the war, borrowers must meet the following conditions:

• Sole residence: as of February 23, 2022, the home must have been the sole residence of the borrower's family. This confirms that the borrower has lost his primary residence.

No overdue debt: as of February 23, 2022, there should have been no overdue payments under the credit agreement. This guarantees that aid will be given to those who faithfully fulfilled their obligations before the start of the war.

Loan write-off procedure: explanations and steps

The Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy provided clarification on the procedure for submitting applications for write-off of loans after the adoption of the relevant law. To do this, follow these steps:

• Adoption of normative acts: within 30 days after the entry into force of the law, the Cabinet of Ministers must adopt all necessary normative legal acts that will determine the procedure for recording losses and writing off loans.
• Recording of damages: after the adoption of acts, it is necessary to officially record the fact of damage or destruction of housing or a car according to the new rules.
• Obtaining supporting documents: the borrower must collect all the necessary documents that confirm the condition of the damaged property.
• Applying to the bank: After that, you need to submit an application to the bank where the loan was issued, along with supporting documents about the losses.

Detailed recommendations for banks and borrowers on dealing with credit debts during martial law can be found on the website of the National Bank of Ukraine.

There are special legal procedures for persons who plan to register ownership of real estate located in the temporarily occupied territories. You can read more about this in the article: How to register ownership of real estate located in the temporarily occupied territory of Ukraine.