In the near future the Russian Parliament plans to consider a number of amendments to the law on bankruptcy of individuals. At the request of Delovoy Peterburg, the Head of the Dispute Resolution and Insolvency practice at Maxima Legal, Sergei Bakeshin, spoke about the draft law and its possible consequences.

Out of debt to get to zero. About the extrajudicial bankruptcy of citizens

The need to introduce a simplified (out-of-court) procedure for the bankruptcy of individuals is long overdue. Now there are two bills being developed by parliamentarians and the Ministry of Economic Development, which are similar in terms of regulating out-of-court bankruptcy.

According to the legislator, an individual who does not have property and income and whose debt is 50-500 thousand roubles (up to 700 thousand roubles under the proposal of the Ministry of Economic Development, can initiate bankruptcy proceedings). The debtor applies to an administrator, who, if the citizen meets these requirements, will add the individual’s name to the Unified Federal Register of Bankruptcy Information.

If during the year an individual does not have property and the creditors do not file for insolvency, the debts are forgiven.

The bill, if adopted, will partially make life easier for financial institutions: they can, without resorting to other tools, write-off bad debt. The proposed changes may affect primarily individuals without assets and on low-incomes with relatively small debts. At present, the bankruptcy procedure is available only to individuals whose debt exceeds 500 thousand roubles.

A new procedure could be effective because it is simple, and as we know, the simpler, the better. Although there are doubts that the bill will be passed, for example, the legal advisers for the State Duma has given a negative assessment.

To read the full article (in Russian), please see the Delovoy Peterburg website >>>