Bankruptcy of an individual

Bankruptcy of a natural person is his legally recognized inability to settle his debt obligations after using all possibilities and procedures for restoring solvency, including debt restructuring.

The opening of proceedings in the case of insolvency of a natural person takes place in the presence of certain signs provided for by the Code of Ukraine on Bankruptcy Procedures.

Signs of bankruptcy

According to the legislation of Ukraine, the grounds for opening proceedings on the insolvency of an individual are the presence of certain signs of insolvency, namely:

1. Undisputed monetary claims of creditors.
2. Delay in the fulfillment of monetary obligations.
3. Difficult financial situation of the debtor.
4. Threat of insolvency.

Importantly! The presence of at least one of the specified signs is sufficient to open proceedings. They make it possible to identify solvency problems in a timely manner and take appropriate measures.

Also, in order to start the procedure for restoring solvency, a natural person-debtor must meet certain requirements established by law:

1. The debtor should not have taken actions aimed at deliberately bringing himself to a state of insolvency.
2. Having a lien on real estate or vehicles can complicate the bankruptcy process.
3. Payment of an advance payment for the remuneration of the arbitration manager.
4. Absence of arrears for certain types of obligations.

Only if all these requirements are met, the commercial court can open proceedings on the insolvency of a natural person.

The bankruptcy procedure of an individual

The procedure consists of several main stages:

1. Submission of an application for initiation of insolvency proceedings.
2. Consideration of the application by the court and initiation of proceedings in the case.
3. Preparatory meeting and introduction of debt restructuring procedure.
4. Execution of the debt restructuring plan / transition to the repayment procedure.
5. Final stage.

In general, the term of the bankruptcy procedure of a natural person depends on the success of debt restructuring. Its purpose is to restore the debtor’s solvency as much as possible, and in case of failure – to free him from debts through the liquidation of the property, if it is available to the debtor or falls under the criteria for realization.

Consequences of bankruptcy of an individual

The recognition of a natural person as bankrupt and the passage of all bankruptcy procedures entails certain legal and reputational consequences that persist for several years after the completion of the proceedings:

• A new bankruptcy procedure cannot be initiated within 5 years;
• For the next 3 years, the person is not considered to have an impeccable business reputation;
• Bankruptcy data is entered into the credit history;
• For the next 5 years after bankruptcy, a person is obliged to inform new potential creditors, guarantors, counterparties about the fact of his bankruptcy in writing.
  How much does the bankruptcy procedure cost?

The lawyers of Prykhodko and Partners will help you determine the exact cost of the bankruptcy procedure for a specific individual.

First of all, it is necessary to conduct a detailed consultation, during which the specialist will be able to familiarize himself with all the nuances of the debtor’s situation. In particular, you should take into account the total amount of debt obligations, the number of creditors, the presence of a pledge on property, a manager, etc.

Also, the bankruptcy procedure of an individual cannot be carried out without an advance payment from the arbitration administrator. The amount of his remuneration is stipulated by the Bankruptcy Code and from 01.01.2024 amounts to UAH 45,420. for 3 months of his work within the debt restructuring procedure.

Only after a comprehensive study of the case will the lawyer be able to calculate the approximate cost of supporting the bankruptcy procedure for this individual.

Court practice on bankruptcy of natural persons

Courts do not immediately recognize a natural person as bankrupt. First, a debt restructuring procedure is introduced to creditors under the guidance of an arbitration administrator.

Restructuring involves an attempt to agree with creditors on improved repayment conditions for the debtor: postponement of payments, cancellation of part of the debt or fines, involvement of third parties for settlements, etc.

If the restructuring is unsuccessful, the matter proceeds to the direct recognition of the debtor as bankrupt. The court determines the list of property for sale (liquidation mass) for settlements with creditors. After that, the remaining unpaid debts are written off.

That is, an initial attempt to settle the situation through debt restructuring is envisaged, and only if the plan is not approved, the court can make a decision on the transition to repayment and declaring the debtor bankrupt.

Consultation on bankruptcy of individuals

Are you interested in filing bankruptcy for an individual? Fill out the short form below and our lawyers will provide you with a detailed estimate of the cost of this procedure for your specific situation!

After processing your request, a specialist will contact you to clarify all the details of the case and prepare an individual calculation of the approximate cost of the bankruptcy procedure just for you.

Don’t delay, find out the real price of getting rid of the debt burden now! Start your journey to financial wellness with our professionals.