Bankruptcy of Individuals (Personal Bankruptcy)
In Russia, over 25,000 people are declared bankrupt every month—a significant figure. This trend is driven by high levels of household debt and reflects a complex interplay of economic and social factors.
According to data from the Federal Resource Register (Fedresurs), in 2022, debt restructuring procedures were initiated for 42,415 individuals. Of these, a restructuring plan was approved in only 461 cases. In contrast, 278,137 citizens were declared bankrupt and underwent asset realization. In 96.7% of cases, the bankruptcy applications were filed by the debtors themselves.
Most individuals considering bankruptcy already have payment arrears by the time they consult a professional or file a court application. These delays have triggered penalties, fines, and other sanctions that only increase their total debt. A smaller segment, while not yet in arrears, is already experiencing significant financial strain in meeting obligations to creditors. The remainder openly admits to being insolvent but, despite this, attempts by any means to continue living a normal life, naively believing the situation cannot get worse and will resolve itself. However, this is not entirely accurate.
First, current legislation allows not only the individual citizen but also their creditors to file a bankruptcy application with the court. In this scenario, the primary risk for the debtor is not merely that bankruptcy proceedings may be initiated against them involuntarily, sooner or later. The greater risk is that the applying creditor can gain significant influence over the bankruptcy procedure, as he holds the right to propose a self-regulatory organization (SRO) from whose members the court will appoint the insolvency officer.
Second, a debtor’s failure to file or delayed filing of a bankruptcy application, despite having legal grounds to do so, may subsequently be deemed by the court—including upon a petitioning creditor’s request—as acting in bad faith. A debtor’s lack of good faith in incurring obligations, in dealings with creditors, and in unjustifiably accumulating debt without a realistic ability to repay it are among the most common grounds for a court to deny the debtor’s discharge from obligations.
Therefore, the issue of personal bankruptcy is relevant not only for those who are already unable to repay their debts but also for individuals experiencing financial difficulties that could lead to bankruptcy.
With our firm’s years of successful experience representing clients in personal bankruptcy cases—acting for both debtors and creditors—we have an in-depth understanding of all the pitfalls, nuances, and complexities a debtor may encounter on this often deceptively complex path to a legal discharge of unmanageable debt.
Our bankruptcy specialists will conduct a thorough analysis of your specific situation, clearly outline the associated risks, and develop a strategic action plan (roadmap) along with a checklist of required documents. If needed, we will also assist you in obtaining any missing documentation before formally submitting everything to the court.
Our specialists will maintain rigorous oversight of all procedural actions by the court, the bankruptcy trustee, and other parties—from the day the bankruptcy case is initiated until the court renders its final decision. This ensures the entire process remains legitimate and free of unwelcome surprises. WE DON’T «ERASE YOUR DEBTS»; WE GUIDE YOU THROUGH THE LEGAL PROCESS TO ACHIEVE A DEBT DISCHARGE.
For a preliminary case assessment, please complete the brief questionnaire below. Our legal team will then contact you promptly to discuss your specific situation in detail. Go to the brief.
Bankruptcy of Legal Entities*
Our firm’s expertise is not limited solely to personal bankruptcy. To submit a request for the bankruptcy of a legal entity and discuss cooperation terms, please send a formal inquiry to: secretary@lbsdl.ru.
Bankruptcy in Kazakhstan*
In 2022, the Ministry of the Republic of Kazakhstan, in collaboration with relevant state bodies, developed the draft Law of the Republic of Kazakhstan “On Restoration of Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan.” This Law was signed on December 30, 2022, and entered into force on March 3, 2023.
The Law provides mechanisms for resolving an individual’s debt through the application of three procedures: out-of-court bankruptcy, solvency restoration, and court-supervised bankruptcy. All three procedures can be initiated only by the debtor themselves, meaning that creditors do not have the right to file for the debtor’s bankruptcy.
According to the new Law, out-of-court bankruptcy is available to citizens of the Republic of Kazakhstan only for debts owed to banks, microfinance organizations (MFOs), and collection agencies, provided the following conditions are met:
- the debt amount does not exceed 5.5 million tenge (1,600 MCI – Monthly Calculation Index);
- the obligations have not been fulfilled for 12 consecutive months as of the application date;
- the citizen has no registered property;
- the citizen has settled their overdue debt with the bank;
- the citizen has not undergone bankruptcy proceedings within the past 7 years.
Out-of-court bankruptcy proceedings will be initiated through the “Electronic Government” web portal. Subsequently, an automated verification of the debtor’s compliance with the eligibility criteria will be conducted via the information system, using data from relevant state and other authorized bodies.
For debts exceeding 5.5 million tenge and other types of liabilities, citizens may initiate judicial bankruptcy procedures. The primary objective of this process is to achieve the maximum satisfaction of creditors’ claims through the realization and distribution of the debtor’s assets.
Judicial bankruptcy proceedings in the Republic of Kazakhstan are administered by financial managers. The following professionals are eligible to serve as financial managers:
- Administrators overseeing bankruptcy procedures for legal entities and individual entrepreneurs;
- Professional accountants;
- Legal consultants;
- Auditors.
Recognizing that not all debtors will be able to afford the services of financial managers, the Law provides for state-funded assistance for individuals from socially vulnerable segments of the population who lack any significant assets.
The third procedure – solvency restoration – allows individuals with a stable income to obtain court-approved debt installment plans for up to 5 years. The repayment plan is developed in collaboration with a financial manager and must be approved by the court. A key advantage of this procedure is that the individual does not acquire the formal status of “bankrupt,” and therefore avoids legal consequences typically associated with bankruptcy, such as:
- A five-year prohibition on obtaining loans and credit (except for microloans from pawnshops);
- Inability to file for bankruptcy again within 7 years;
- Mandatory financial monitoring of the bankrupt individual for 3 years following the bankruptcy.
ATTENTION! The following types of debts cannot be discharged through bankruptcy:
- Child support and alimony obligations;
- Liabilities for compensation of harm caused to life or health;
- Claims for damages resulting from criminal offenses.
With the opening of SDL Legal Boutique’s office in Kazakhstan (Astana), our firm now provides bankruptcy services for citizens of the Republic of Kazakhstan. To submit a bankruptcy application, receive a preliminary case assessment, and discuss cooperation terms, please send a formal inquiry to: secretary@lbsdl.ru
