Фото: Writing off loans during the war in Ukraine

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Kolesnyk Ilya

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Writing off loans during the war in Ukraine

Reading time: 3 min.

Many citizens depend on loans taken before or during the war. Due to the difficult situation in the country, many people are looking for ways to write off loans.

There are several ways to write off loans in our wartime, what are they?

  1. Restructuring and write-off of penalties

Restructuring is a revision of the terms of a loan with a financial institution. A bank or microfinance institution may change the payment schedule, reduce the amount of monthly payments or issue a loan for a longer period, if the debtor confirms the impossibility of paying it under predetermined conditions. If the debt burden on the debtor is too high, the organization may agree to reduce the percentage of interest that makes up the bulk of the loan or provide the client with a loan holiday. The possibility of debt restructuring is established by the Law of Ukraine "On financial restructuring" and "On consumer lending". Additionally, in the context of martial law, the National Bank of Ukraine issued an Open Letter dated April 14, 2022, which recommended that financial institutions, due to a significant deterioration in their financial condition, provide consumers with debt restructuring. Also, the novelty of wartime was the Law of Ukraine No. 2120, indicating that for the duration of martial law, persons should be exempted from paying a penalty (fine and penalty). Accordingly, the debtor may demand that the credit institution write off illegally accrued penalties.

  1. Bankruptcy

In the event of a total lack of money, you can apply to the court with an application for bankruptcy. The court will determine whether the debtor has the right to initiate this procedure and decide on debt cancellation. The filing of bankruptcy allows you to reduce the financial burden and receive partial or complete relief from debts. Under certain conditions, for example, if a person could not pay debts for a long time, his debt can be recognized as uncollectible and forgiven by creditors and the court.

Martial law did not become a restrictive factor for creditors to foreclose on the property of debtors in the event of an overdue debt. Initiating bankruptcy can protect against illegal confiscation of property and solve the problem within the legal framework.

Wartime conditions can lead to lower incomes and higher spending for citizens. Accordingly, this deprives them of funds to pay credit obligations. Filing for bankruptcy will allow you to confirm your own insolvency and get rid of debt.

After granting bankruptcy, an individual is given the opportunity to start over with their life and their credit history. This means that all previous records of debts, payments, debts, etc., which had a negative impact on her credit rating, will be destroyed.

What are the privileges for certain categories of citizens?

During the war, it is appropriate to mention military personnel called up for service during the period of mobilization as a special category that has privileges to pay loans. In particular, the Law of Ukraine “On social and legal protection of military personnel and members of their families” establishes that military personnel are entitled to receive preferential terms from financial institutions, which includes exemption from paying interest and penalties on loans.

For advice on lending and debt relief, leave a request on our website. We will become reliable partners in resolving the issue of bad debts and provide you with high-quality debt relief.

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Assistant lawyer

Specialist in bankruptcy of individuals and legal entities. Provides legal support in bankruptcy procedures for individuals, private limited liability companies, legal entities, as well as closing executive proceedings, concluding restructuring and settlement agreements with financial institutions

Contact now
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