Is there an individual bankruptcy law?

There is no separate bankruptcy law for an individual. Bankruptcy proceedings of individuals are regulated by Book 4 of the Code of Ukraine on Bankruptcy Procedures.

Who can become bankrupt and where?

The proceedings on the insolvency of an individual may be opened only at the request of the debtor – an individual or an individual entrepreneur.
An application for bankruptcy of an individual is filed with the economic court at the location of the debtor.

What does a bankruptcy of an individual look like?

In general, the procedure for restoring a citizen’s solvency (bankruptcy) can take the following form:
1. If there are grounds, a decision is made to restore solvency.
2. Collection of documents, preparation of an application and submission of a package of documents to the economic court.
3. Full implementation of court decisions and recommendations of the arbitration manager.
4. Participation in the preparation of a debt restructuring plan.
5. Implementation of the debt restructuring plan *.
6. Closure of the case and release of the citizen from debt.

* In case of non-fulfillment of the plan, the debts of the individual are paid off, while such a person suffers reputational and property losses.

 

Pros of bankruptcy of an individual?

Depending on the nature of the relationship, an individual (citizen) can apply for bankruptcy to:
1. Cleaning of any debts.
2. Closing of all monetary obligations under contractual relations.
3. The decision of all obligations under loan agreements, including foreign currency loans.
4. Write-off of tax debt 3 years before the day the decision is made to open insolvency proceedings.
5. The decision of other monetary obligations.
At the same time, an individual should remember that the debtor’s debts for the payment of alimony, compensation for damage caused by injury, other damage to the health or death of an individual, and the payment of a single contribution to compulsory state social insurance (ERU) are not subject to restructuring (cancellation).

What grounds indicate the insolvency of an individual?

The grounds for bankruptcy of an individual are:
1. Delay in obligations to creditors (bank, etc.) the amount of which is at least 30 minimum wages.
2. Termination of repayment (payment) of loans in the amount of more than 50 percent within 2 months.
3. Adoption of a decision in enforcement proceedings on the absence of property by the debtor.
4. The presence of other circumstances confirming that in the near future an individual will not be able to fulfill monetary obligations and may become bankrupt.

What should be indicated in the application and added to it?

In a bankruptcy petition, an individual must indicate:
1. Name of the economic court.
2. Surname, name, patronymic.
3. Contact details (phone number, address, email).
4. The circumstances that served as the basis for appeal to the court.
5. The list of documents attached to the application.
The following applications must be added to your bankruptcy petition:
1. A document confirming the presence (absence) of the status of an individual entrepreneur.
2. A complete list of creditors and debtors.
3. Description of the property (apartment, house land), owned by the right of ownership and copies of documents confirming such ownership.
4. The list of property pledged (mortgage) or property encumbered in another way.
5. Copies of documents on transactions completed (during the year) in relation to real estate, securities, shares in the authorized capital, vehicles.
6. Copies of all transactions amounting to at least 30 minimum wage sizes.
7. The list of bank accounts (including deposit accounts) opened with banks and other financial and credit institutions of Ukraine and abroad.
8. A copy of the work book (if available) and information about the employer (employers).

9. Declaration of property status. The declaration is filed for the three years (for each year separately) that preceded the filing of the application with the court. The declaration must contain information on the property, income and expenses of the individual and his family members in excess of 30 minimum wages.
   10. Evidence (receipt, payment order) of advance payment to the deposit account of the court, remuneration to the manager of the restructuring for three months of the exercise of authority.
   11. Certificate of good conduct for economic crimes.
   12. A power of attorney or other document certifying the authority of the representative, if there is a representative.
   13. Proposals for debt restructuring.
   What if there is no money to advance the remuneration (salary) of the arbitration manager?
   Advance of the remuneration (fee) of the arbitration manager is one of the mandatory requirements stipulated by the Code.
   The legislation does not contain provisions for granting a deferral or installment plan for the advance payment of remuneration (labor remuneration) of the arbitration manager.
   In the absence of evidence of advance payment of remuneration (labor remuneration) of the arbitration manager, the court may leave such a statement without motion, providing a time limit for eliminating the deficiencies or return it to an individual.

 

What if there is no work book?

Submission of a copy of the work book is required, if available.
In the absence of a work book, the application for insolvency must indicate its absence.

How to confirm the presence or absence of flp status?

The presence of FLP status is confirmed by extracting or extracting from the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Associations.
The absence of the FLP status is confirmed by the removal from the Unified State Register of legal entities, individuals, entrepreneurs and public groups.

Is it possible to pay the salary of an arbitration manager at the expense of creditors?

If the procedure continues after the funds advanced by the applicant have ended, the main remuneration of the arbitration manager is paid from the funds received from the sale of the property of the debtor, which is not pledged.
Also, lenders can create a fund to pay cash compensation and reimburse the costs of the arbitration manager.

 

What is included in measures to ensure the requirements of creditors?

Measures to ensure creditors’ claims include:
1. Prohibition of bankruptcy to an individual to conclude transactions (contracts).
2. Obligations of an individual to transfer property (apartment, house, land, etc.), other valuables for storage to third parties.
3. Committing or abstaining from certain actions.
4. The prohibition of an individual to dispose of his real estate (apartment, house, land, etc.) and securities.
5. The seizure of specific property of an individual.
6. Other measures to preserve the property of a citizen.
7. Prohibition of travel to an individual abroad.

What is debt restructuring?

Debt restructuring is a judicial procedure in the case of insolvency (bankruptcy) of an individual, it is used to restore the solvency of the debtor by changing the method and procedure for fulfilling its obligations according to the plan of restructuring the debts of an individual.

What is a moratorium on satisfying creditors?

A moratorium on satisfying creditors’ requirements is introduced for a period of 120 days, from the moment the bankruptcy case of an individual is opened.
During the moratorium on satisfaction of creditors’ claims:
1. The debtor’s execution of monetary obligations, including obligations to pay taxes and duties (obligatory payments), the deadline for which came before the opening of the insolvency proceedings, is stopped.
2. The recovery from the debtor shall be stopped for all executive documents, except for executive documents on the requirements for the recovery of alimony or for compensation for harm caused by mutilation, other damage to the health or death of an individual, as well as except for cases where the enforcement proceedings are at the stage of distribution of funds collected from the debtor , including those received from the sale of the property of the debtor, or the location of the property at the stage of sale from the date of publication of information about the sale.
3. The penalty (fine, penalty) is not charged, other financial sanctions for non-performance or improper performance of obligations to satisfy the requirements covered by the moratorium are not applied.
4. The limitation period for claims on the debtor is stopped.
5. The inflation index for the entire time delay in fulfilling the monetary obligations of an individual is not applied.

Does the moratorium apply to all debts?

The moratorium does not apply to:
1. Compensation for damage caused by injury, other damage to health or death of an individual.
2. Payment and collection of alimony.
3. Fulfillment of requirements for executive documents of a non-property nature, obliging the debtor to take certain actions or to refrain from performing them.
4. Satisfaction of creditors’ requirements in the debt restructuring procedure of the debtor in accordance with the approved plan and in the debt repayment procedure of the debtor in accordance with the Code.

 

 

What is included in measures to ensure the requirements of creditors?

Measures to ensure creditors’ claims include:
1. Prohibition of bankruptcy to an individual to conclude transactions (contracts).
2. Obligations of an individual to transfer property (apartment, house, land, etc.), other valuables for storage to third parties.
3. Committing or abstaining from certain actions.
4. The prohibition of an individual to dispose of his real estate (apartment, house, land, etc.) and securities.
5. The seizure of specific property of an individual.
6. Other measures to preserve the property of a citizen.
7. Prohibition of travel to an individual abroad.

What is debt restructuring?

Debt restructuring is a judicial procedure in the case of insolvency (bankruptcy) of an individual, it is used to restore the solvency of the debtor by changing the method and procedure for fulfilling its obligations according to the plan of restructuring the debts of an individual.

What is a moratorium on satisfying creditors?

A moratorium on satisfying creditors’ requirements is introduced for a period of 120 days, from the moment the bankruptcy case of an individual is opened.
During the moratorium on satisfaction of creditors’ claims:
1. The debtor’s execution of monetary obligations, including obligations to pay taxes and duties (obligatory payments), the deadline for which came before the opening of the insolvency proceedings, is stopped.
2. The recovery from the debtor shall be stopped for all executive documents, except for executive documents on the requirements for the recovery of alimony or for compensation for harm caused by mutilation, other damage to the health or death of an individual, as well as except for cases where the enforcement proceedings are at the stage of distribution of funds collected from the debtor , including those received from the sale of the property of the debtor, or the location of the property at the stage of sale from the date of publication of information about the sale.
3. The penalty (fine, penalty) is not charged, other financial sanctions for non-performance or improper performance of obligations to satisfy the requirements covered by the moratorium are not applied.
4. The limitation period for claims on the debtor is stopped.
5. The inflation index for the entire time delay in fulfilling the monetary obligations of an individual is not applied.

Does the moratorium apply to all debts?

The moratorium does not apply to:
1. Compensation for damage caused by injury, other damage to health or death of an individual.
2. Payment and collection of alimony.
3. Fulfillment of requirements for executive documents of a non-property nature, obliging the debtor to take certain actions or to refrain from performing them.
4. Satisfaction of creditors’ requirements in the debt restructuring procedure of the debtor in accordance with the approved plan and in the debt repayment procedure of the debtor in accordance with the Code.

What is liquidation mass?

The liquidation mass of a bankrupt individual is all types of property assets (property and property rights) of an individual.
These include an apartment, a house, land, a car and other assets.

What is not included in the liquidation mass?

The liquidation mass does not include:
1. Housing, which is the sole place of residence of the debtor’s family (an apartment with a total area of ​​not more than 60 sq.m. or a living area of ​​not more than 13.65 sq.m. for each member of the family or a residential building with a total area of ​​not more than 120 sq.m. ) and is not subject to security.
2. Funds held in the accounts of the debtor in pension funds and social insurance funds.
3. Other property that may not be foreclosed in accordance with the law.

Is it possible through bankruptcy to close questions on foreign currency loans?

In accordance with paragraph 2 of the final and transitional provisions of the Code, the Law of Ukraine “On the moratorium on the recovery of property of citizens of Ukraine provided as collateral for loans in foreign currency” expires one year after the date of enforcement of this Code, that is, October 21, 2020
The law is very important for debtors of individuals who received consumer loans in foreign currency.
During the validity of the Law, immovable residential property that is considered a pledged item and / or a mortgage item cannot be forcibly collected (alienated without the consent of the owner) if such property acts as a security for an obligation of a citizen of Ukraine (borrower, property guarantor) on consumer loans in foreign currency.
But it must be borne in mind that such a rule of the Law is valid if there are four relevant conditions:
1. Such housing is used as the place of permanent residence of the borrower or property guarantor.
2. Housing is under construction and is in a mortgage.
3. The borrower or property guarantor does not have other housing.
4. The total area of ​​housing (construction in progress) does not exceed 140 square meters. m. for an apartment and 250 sq.m. for a residential building.
Also, during the validity of the Law, property that is to be recovered from the borrower cannot be forcibly recovered in case of insufficient funds received by the creditor from the sale of the subject of pledge or mortgage.
Any credit institution does not have the right to assign (sell, transfer) debt or debt in favor of another person, since there is a direct prohibition on such actions in the Law.

Can a mortgagor take advantage of bankruptcy?

If the debtor – an individual is at the same time a mortgagor, then he can use the bankruptcy procedure.
If the debtor – an individual is not a mortgagor, then he can not use the bankruptcy procedure, since the legislation does not contain provisions on this possibility.

What are the terms of bankruptcy proceedings?

The procedure for restoring the solvency (bankruptcy) of an individual in any case depends on the nature and complexity of the case. In general, the terms of restoration of solvency of an individual can reach from six months to a year.

What is the cost of bankruptcy?

The costs of the restoration of the solvency of an individual consist of the payment of a monetary reward to the arbitration manager (5 times the subsistence minimum for able-bodied individuals for each month) and other payments.

 

What is a bankruptcy company or firm for?

A bankruptcy company (company) is needed to provide qualified assistance to an individual in bankruptcy, to simplify the life of a citizen, as specialists take on part of the obligations.
Also, a bankruptcy company (firm) can guarantee the maintenance of the bankruptcy procedure of an individual without abuse of procedural legislation by other participants, and in the presence of such abuse – on behalf of the bankrupt, carry out an appropriate response.

Cons of bankruptcy of an individual?

An individual suffers certain losses in reputation:
1. Within 5 years, after an individual is declared bankrupt, insolvency proceedings cannot be opened upon his application.
2. Within 5 years, such a person is obliged to report the fact of his insolvency before entering into loan and credit agreements.
3. Within 3 years, after a natural person is declared bankrupt, an individual cannot be considered as having an impeccable business reputation.