This article is for those who continue to hide from creditors, public and private performers, collectors, instead of starting their financial life “from scratch”.
The insolvency procedure of individuals will be of interest primarily to debtors on foreign currency loans, as it creates a legal mechanism that allows a natural person-debtor to restructure its debt obligations and transfer them from foreign to national currency of Ukraine to prevent immediate sale of mortgaged banks. loans. A typical portrait of a bankrupt can look like this:
The reasons for bankruptcy of individuals are different: among them the inefficient disposal of their own assets or the excess of financial obligations. Creditors of a natural person can be both natural persons and legal entities or subjects of private or public law (Pension Fund, Tax Service, Customs Service). Judicial practice shows that a significant part of cases were initiated by debtors with debts of up to UAH 1 million (more often even up to UAH 500,000). These are ordinary citizens, employees, retirees who have been careless in issuing so-called “quick loans” or “payday loans” at huge interest rates. As a result, at some point, after repeated “re-lending”, such individuals do not have the financial ability to repay loans and accrued penalties. Also, in light of the pandemic, the loss of citizens’ jobs, their own businesses or the depreciation of their assets due to the coronavirus crisis does not make it possible to properly meet existing debt obligations.
To date, the bankruptcy procedure of individuals in Ukraine has become a reality. And it gives citizens new opportunities to solve their debt problems. A person is declared insolvent, is bankrupt, through a court, and therefore it is impossible to do without the services of a qualified lawyer. The first question that arises in potential customers in this area concerns the cost part.
Thus, the minimum amount of debt, so that the case of restoring the solvency of an individual makes economic sense, is 300 thousand UAH. For submission of the debtor’s application to the court (court fee) – 0 UAH. As of March 2021, as of March 2021, 1550 subsistence minimums for able-bodied persons (5 subsistence minimums for each month of performance of duties) will be UAH 3,450 for the advance payment of remuneration to the arbitration trustee. Notarial services for registration actions (if necessary) – UAH 2-4 thousand. The services of a qualified lawyer will cost about 100 thousand hryvnias for support, these costs depend on the complexity of the case and may vary. The cost of bankruptcy depends on the chosen package of services, the debtor’s region, the type of debt, the availability of property of an individual, encumbrances and other factors.
In general, the procedure can take at least 8 months.
Examples from practice make it clearer how bankruptcy is beneficial for an individual. So, for example, a person who filed for bankruptcy borrowed about $ 100,000 from a bank in 2008 to buy a two-bedroom apartment in Kyiv. At the time of the trial, overdue debts of over one and a half million hryvnias had been formed, while the market value of the mortgage (mortgage) apartment was a little over 1.2 million hryvnias.
The court found that the person “is in a difficult financial situation: due to financial insolvency to repay debts disproportionate to his assets, due to the inability to find paid work in Ukraine in such an amount that would repay credit obligations that have become further disproportionate. -large due to the financial crisis in 2008 and 2014. ” Therefore, in the process of litigation, the lender and the borrower agreed on a debt restructuring plan, which was later approved by a court decision. From the date of signing this plan, any debts / interest / penalty (fines, penalties) and other direct or indirect sanctions or debts under the loan agreement are not applied.
In the future, the borrower will gradually repay the balance of the unpaid debt within 10 years. At the same time, the amount of monthly installments to repay the debt will be insignificant. After all, the law provides for a minimum amount that must remain “in the family” every month to meet household needs: at least one subsistence level for the debtor and each person who is dependent on him. In the mentioned case it is approximately 4300 hryvnias. The debtor may not be officially employed at the time of the bankruptcy procedure and will not be able to repay the debts at all or receive the minimum wage. In the case of the minimum wage, the monthly payment on the restructured loan will be approximately UAH 500. It is also possible to sell the specified apartment at bankruptcy auctions to a person who will act on behalf of the bankrupt. The terms of the auction are set in such a way that the price gradually decreases, so the property can be redeemed with a 20% or 25% discount.
Another example. A person has a debt on a loan to an individual and debts to the state represented by the Customs Service. At the same time, the debtor “legally” has no property and income from which to repay debts, enforcement proceedings were ineffective. The debtor submitted to the court information about all available property and a draft restructuring plan, in which he determined that he hopes to find a job and plans to partially repay debts within 5 years, and the balance of such creditor’s debt is forgiven (written off). The court, and later the arbitral trustee, checked the submitted documents and the debtor’s property and found that there was nothing to repay the debts. It is important to submit to the court only truthful legal information about the property status. If inaccurate information is found, the court simply closes the case and creditors can also submit evidence to the court. In this case, the representative of the creditor – the customs authority did not appear at the meeting of creditors, and the lender agreed to change the method of fulfillment of obligations. Thus, the arbitral trustee submitted to the court the conclusion that any property of the debtor is missing and it is necessary to proceed to the procedure of debt repayment, ie to the final stages of declaring the debtor bankrupt. As for the debt to the state, as a result of the end of the entire procedure in court, it will be written off. If the restructuring plan is not approved or not implemented, the debtor is declared bankrupt and the procedure for repayment of its debts is opened. The Commercial Court, when ruling on the completion of the procedure for repayment of the debtor’s debts and closing of the insolvency proceedings, makes a decision on the release of the debtor – an individual from debts. That is, the individual is released from further fulfillment of creditors’ claims after the completion of court proceedings in the case of insolvency and the obligation to repay outstanding debts.
At the same time, an important limiter of cases of abuse of rights is the possibility of declaring an individual bankrupt no more than once every 5 years. Also, there are debts from which the bankruptcy procedure is not released, they include:
– compensation for damage caused by injury, other damage to health or death of an individual;
– requirements for payment of a single social contribution, alimony;
– fulfillment of other obligations that are inextricably linked to the identity of the individual
Thus, after the bankruptcy procedure, an individual has the opportunity to continue their activities without the old obligations and in the future with experience to avoid financial mistakes. Establishing insolvency together with a team of our experienced professionals will help the debtor “get rid of debt” with the least loss of property or restructure debts on “favorable” terms. The choice as to how to solve the debt problem is up to each of the debtors, but it seems obvious.