Personal bankruptcy means recognition by an arbitration (commercial) court that a citizen is unable to meet their financial obligations and settle accounts with creditors. Any citizen whose debt to official organisations exceeds 500 thousand roubles may initiate the procedure, provided that the delay in payment has reached three months. However, a citizen is entitled not to wait for these two circumstances to arise if they foresee the possibility of bankruptcy where the relevant conditions exist. Bankruptcy is truly the best way to get rid of loans, debts and calls from debt collectors.
Once a person is declared bankrupt, the following cease:
- satisfaction of creditors' claims under monetary obligations and for the payment of mandatory payments;
- accrual of penalties and interest on obligations;
- the effect of enforcement documents concerning property recovery.
Step-by-step guide to bankruptcy proceedings:
Legal analysis of my client's situation:
- identifying the list of creditors, the amount of debts and the period of delay;
- identifying the property owned by my client;
- developing a strategy for preserving that property.
Collection of the necessary documents:
- The citizen's task is to prove insolvency and to convince the court that there are circumstances preventing repayment of the debt. If the documents submitted to the court confirm a minimal income of the person seeking bankruptcy, while the citizen owns cottages, flats and yachts, this will most likely lead the court to suspect an attempt at fictitious bankruptcy.
Preparation of the petition:
- The petition is filed with the arbitration court at the place of residence.
Filing the petition:
- The law provides for three ways of filing a personal bankruptcy petition: in person, by post or online.
Implementation of the court decision:
the issue of a citizen's insolvency can be resolved in three ways:
- debt restructuring;
- sale of the bankrupt's property;
- settlement agreement;
- recognition of bankruptcy – the state and the creditors have recognised the citizen as insolvent and have stopped pursuing them with demands to repay the debt after all measures for the maximum satisfaction of claims have been taken.