Law on out-of-court bankruptcy of citizens came into force

The amendments allow individuals and individual entrepreneurs to go through bankruptcy proceedings without the participation of a court and a financial manager. This right can be exercised by debtors whose liabilities range from 50 to 500 thousand rubles. It is indicated that this amount should not include fines, penalties, interest on loan delays, losses in the form of lost profits or other property or financial sanctions. In addition, in relation to the debtor, enforcement proceedings must be completed due to the lack of property on which collection can be levied.

The law completely excludes professional market participants from the process, that is, arbitration managers. The procedure will take place through the MFC.

In a bankruptcy petition, a citizen will have to list all creditors known to him. Within one working day, the MFC will check whether there is information about the return of the writ of execution to the claimant, as well as the absence of information about the conduct of other enforcement proceedings. At the end of the audit, a notice of the beginning of the procedure is posted in the Unified Federal Register of Bankruptcy Information. From this moment, the citizen is officially released from all fines, but he will not be able to take loans, as well as receive loans or become a surety. Creditors, for their part, will be able to apply for the introduction of a general bankruptcy procedure against a citizen.

The extrajudicial procedure will be completed in six months. The citizen will be released from the debts indicated in his application. The bankruptcy procedure can only be used after 10 years.

According to representatives of the Ministry of Economic Development, which is the author of the initiative, the law will help citizens get rid of unbearable debts.

Recall that at the end of last year the number of potential bankrupts in Russia exceeded one million. At that time, many citizens could not go to the bankruptcy procedure due to its high cost.

Due to the crisis caused by the coronavirus pandemic, Russians have begun to miss payments on loans and microloans more often. In the second quarter of 2020, citizens were unable to fulfill their debt obligations in almost every second case. Also, during the crisis, Russians were less likely to approve consumer loans . Banks have tightened requirements for borrowers and issue loans only to those who are considered the most reliable.