Bankruptcy of individuals
The Code of Bankruptcy Procedures, which entered into force in October 2019, legalized the long-awaited practice of bankruptcy of individuals by both creditors and debtors. The adoption of this legislative act, which allows to regulate the relationship between individuals and their creditors and transfer them to the scope of the bankruptcy procedure, has been suggested for a long time. The new code allows the creditor to get out of the legal impasse, since it allows not only to achieve the maximum repayment of debt, but also to get rid of its hopeless part, which significantly worsens financial performance.
Introduction of bankruptcy practice
No less useful is the introduction of the practice of bankruptcy of individuals and debtors, whose debt to creditors continued to hang over them like a sword of Damocles, even in the case when all the possibilities for its repayment were exhausted in good faith by the debtor. Thus, the sale of collateral, other assets of the debtor, could not lead to the full repayment of the debt to the creditor, which means that the legal consequences of the presence of this debt persisted indefinitely. The debtor was under constant threat of resuming the recovery procedure, which had an extremely negative impact on the restoration of his solvency. Debt repayment through the bankruptcy procedure allows you to find a way out of this vicious circle, and will undoubtedly be useful for a bona fide debtor.
New Code Features
As for the negative aspects of the new Code, it is likely that weaknesses (and they do exist) of this regulatory legal act can be used to evade full repayment of debts, especially if the debtor has assets that are not related to collateral. This issue is all the more relevant at the initial stage of the formation of judicial practice of bankruptcy of individuals. Nevertheless, Book Four of the new Code, which regulates the bankruptcy of individuals, despite some legal gaps, as well as a bias towards the interests of creditors, can definitely be regarded as a step forward in the field of lawmaking regarding the restoration of solvency.
© Legal agency “AKTIV”, 2020.
