QUESTION: What is individual bankruptcy and when is it considered?

Individual bankruptcy is a legal judicial or out-of-court procedure that allows a citizen to officially be released from unbearable debt obligations, provided they are completely unable to pay them. This mechanism was created so that honest citizens who find themselves in a difficult life situation can start their financial life with a clean slate, rather than remaining debtors until the end of their days.

This procedure is considered as a measure of last resort in cases where the total amount of debts to banks, microfinance organizations, the tax office, and individuals exceeds a person's real ability to repay them. If monthly payments on all obligations have become unbearable, and the sale of personal property does not cover the entire amount of the debt, bankruptcy becomes the only legal way out of the crisis.

Before starting the procedure, it is necessary to carefully weigh all the consequences, as the status of a bankrupt imposes certain temporary restrictions. For several years after the completion of the case, a citizen is obliged to report the fact of their bankruptcy when applying for new loans, cannot hold management positions in legal entities, and cannot re-initiate the procedure in a simplified manner.

Given the complexity of legal nuances, going through the procedure requires mandatory preliminary consultation with professional bankruptcy lawyers or financial managers. Specialists will help assess the prospects of the case, collect the necessary package of documents for submission to the arbitration court or IFC, and will represent the interests of the citizen at all stages of this difficult process.