Bankruptcy of an individual

Recently, there has been an increase in the number of cases when an individual, having overestimated his capabilities and prospects or been influenced by the media, dares to take a very responsible step – obtaining a loan at a fairly favorable interest rate. However, after some time it turns out that such a rate is relevant only in a certain period of time. If an individual cannot fulfill his obligations under the received loan, fines are applied. As a result, it is necessary to return an amount that may be several times higher than the amount of the received loan. Having got into a rather difficult situation, the debtor looks for any options to get out of it. One of the common options is the declaration of bankruptcy of an individual.

Bankruptcy of individuals became possible with the entry into force of the Bankruptcy Code (October 21, 2019). According to the definition, a debtor is an individual who is unable to fulfill his monetary obligations when they are due.

Which of the natural persons can be declared bankrupt?

Only the debtor can apply to the courts to initiate a bankruptcy case. Similar cases are considered by commercial courts at the place of registration of an individual.

In order to make a positive decision regarding the bankruptcy of an individual, the following conditions must be met:

• Debt is at least 30 minimum wages.
• Stop repaying loans or making other scheduled payments in the amount of at least 50% or more of the monthly payments.
• Issuance of a resolution in executive proceedings regarding the applicant’s lack of property that is subject to enforcement.
• Other circumstances are confirmation of the impossibility of fulfilling monetary obligations or making regular current payments.

What debts are subject to write-off?

According to the bankruptcy procedure of an individual, any debts are subject to write-off:

• Loans, bank credits.
• Fines, tax debt.
• Debts from communal services.
• Loans provided by non-bank financial institutions.
• Debts related to the conclusion of contracts and agreements of a civil law nature.

After the bankruptcy procedure is completed, the individual is released from the demands of creditors (debts). At the same time, the declaration of bankruptcy does not exempt the following debts from repayment:

1. Alimony.
2. Reimbursement of the school caused by mutilation or other health damage/death of an individual.
3. Debts that are inextricably linked to the personality of an individual.

Not only can the above-mentioned financial obligations not be written off, but in their presence, an individual does not fall under the category of bankruptcy. What to do in this situation? First, the requirements that are inextricably linked to the personality of the natural person are fulfilled, and only after that, you can apply for insolvency and confirmation of bankruptcy.

What are the consequences of recognizing an individual as bankrupt?

After the court opens a bankruptcy case, the accrual of fines and interest on credit obligations is frozen. This is done so that the amount of debt does not increase. The debtor does not have to pay funds to different creditors – all debt obligations are combined into one case. The result is the recognition of a natural person as bankrupt, write-off of debts, sale of his property or restructuring of debts. Due to the recognition of an individual as bankrupt, the borrower receives the long-awaited peace: there is a moratorium on debt collection, and collectors cannot terrorize the debtor under any circumstances.

However, the bankruptcy procedure involves quite unpleasant moments. For example, after the debtor filed an application with the court, the ban on his departure abroad comes into effect. All property, except real estate, where an individual lives, is sold to pay off debts.

Bankruptcy of an individual is a rather complicated process, which, without a doubt, should be entrusted to real professionals. “PRIKHODKO & PARTNERS” lawyers have been working in this field for 5 years and can provide high-quality, professional assistance. The company’s specialists will do their best to help you get out of any situation with minimal losses. Sign up for a consultation and calculation of the price of bankruptcy registration!