Bankruptcy of individuals

Entered into legal force in October 2019. The Code of Bankruptcy Procedures has legalized the practice of bankruptcy of individuals, long expected by both creditors and debtors. The adoption of this legislative act, which allows to regulate the relationship between individuals and their creditors and to transfer them to the scope of the bankruptcy procedure, has been requested for a long time. The new code allows the creditor to get out of the legal impasse, as it allows not only to achieve the maximum repayment of the debt, but also to get rid of its hopeless part, which significantly worsens financial indicators.

Introduction of bankruptcy practice

No less useful is the introduction of the practice of bankruptcy for natural persons and debtors, whose debt to creditors continued to hang over them with the sword of Damocles, even when all possibilities for its repayment were exhausted by the debtor in good faith. Thus, the realization of collateral property and other assets of the debtor could not lead to full repayment of the debt to the creditor, which means that the legal consequences of the existence of this debt persisted indefinitely. The debtor was under constant threat of resuming the collection procedure, which negatively affected the restoration of his solvency. Repayment of debt through the bankruptcy procedure allows you to find a way out of this vicious circle and will undoubtedly be useful for a conscientious debtor.

Features of the new Code

As for the negative points of the new Code, there is a possibility that the weak points (and they exist) of this regulatory act can be used to evade the full repayment of the debt, 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 legal practice of bankruptcy of natural persons. However, Book IV of the new Code, which regulates the bankruptcy of natural persons, despite some legal gaps, as well as a bias in the direction of the interests of creditors, can be unequivocally regarded as a step forward in the field of law-making related to the restoration of solvency.