“Poverty is not a vice” or how to go bankrupt out of court

In Russia, it is planned to make the bankruptcy procedure widespread and accessible to most debtors; Iusland Lawyer Ekaterina Balioshenko explains exactly what changes will be made to the legislation. The bankruptcy procedure will take place out of court through the MFC or the State Services portal.

Currently, not all debtors have access to out-of-court bankruptcy procedures.

Only citizens whose debt ranges from 50,000 rubles to 500,000 rubles can take advantage of it; also a mandatory requirement is completed enforcement proceedings, in which it is proven that the debtor is unable to pay off the current debt (Clause 4, Part 1, Article 46 of the Federal Law "On Enforcement production" dated October 2, 2007 N 229-FZ).

In addition, extrajudicial bankruptcy can only be used once every 10 years.

It is these strictly defined criteria that do not allow citizens with a small official income to use extrajudicial bankruptcy.

In this regard, to facilitate access to the extrajudicial bankruptcy procedure, it is proposed to make the following changes to bankruptcy legislation:

1. Change the amount of debt. Extrajudicial bankruptcy will be available to citizens with a debt amount from 25,000 rubles to 1,000,000 rubles.

2. Shorten the period. Extrajudicial bankruptcy will be available to the debtor once every 5 years.

3. Start extrajudicial personal bankruptcy proceedings for pensioners and citizens for whom social payments are the only source of livelihood, 1 year after the initiation of enforcement proceedings by bailiffs. For other debtors - 7 years after the initiation of enforcement proceedings.

It is likely that a bill with changes to bankruptcy legislation will be submitted to the State Duma before the end of this year.