Individual bankruptcy: stages and specifics of the procedure
If in the past bankruptcy only concerned legal entities, today individual bankruptcy is possible in Ukraine as of 2020. For now, this is a fairly complex procedure, since it appeared only last year. This is due to legislative changes that had long been in development and finally came into force in October 2019. As a result, a profession such as an individual bankruptcy attorney, whose services are provided by our law firm, has become in demand.
The law on individual bankruptcy
In October 2018, the Code of Ukraine on Bankruptcy Procedures was adopted. The legislators took this step because the previous bankruptcy regulation procedure allowed debtors to find loopholes to evade their obligations to creditors. The process was very lengthy and ineffective.
The new code introduces several novelties:
- simplification of the procedure for initiating bankruptcy;
- changes to the voting procedure of creditors at creditors' meetings;
- new standards of liability of the debtor's manager;
- shorter time limits for considering cases;
- the possibility of invalidating any transactions of the debtor within the three years preceding the commencement of bankruptcy proceedings.
The entire body of legislation consists of four books, the last of which is devoted to the restoration of the solvency of an individual. The draft law on individual bankruptcy had been developed for many years. Its emergence was driven by the legislators' understanding of the need to help participants in the credit market.
The insolvency procedures for an individual entrepreneur and a natural person are identical. This is because the individual entrepreneur answers for his debts with all the property owned by the individual. An analysis of the principles underlying the new code reveals a shift of focus from the bankruptcy procedure itself to measures to prevent it.
Individual bankruptcy - step-by-step instructions
The procedure of individual bankruptcy in Ukraine consists of the following stages:
- Filing an application. It should be noted that only the individual himself can initiate such a procedure.
- Appointment of an arbitration manager. A moratorium on the payment of debts is imposed on the debtor's property for 120 days.
- Within 30 days, creditors file their claims against the debtor. The court may examine the creditors' claims within 60 days of the initiation of the case.
- During the 120 days of the moratorium, the debtor, together with the arbitration manager, develops a restructuring plan. It must be agreed with the creditors and then submitted to the court. The document specifies which funds go towards repaying debts and which stay with the individual.
- If the above plan is not implemented, not agreed with the creditors or not submitted to the court, the individual is declared bankrupt. The process of repaying debts and selling property then takes place through the court.
The following funds are not subject to write-off:
- compensation for harm caused to health or related to a person's death;
- maintenance (alimony) obligations;
- performance of other claims directly related to the debtor's person.
The grounds for initiating individual bankruptcy proceedings are the following circumstances:
- the amount of the overdue obligation exceeds 30 minimum wages;
- the debtor has not repaid loans or other scheduled payments in excess of 50 per cent of each of them for two months;
- in the course of enforcement proceedings, a ruling was issued stating that the individual has no property on which a levy may be enforced;
- the debtor has other obligations that will prevent him from fulfilling his monetary obligations and making scheduled payments in the near future.
What documents are required for individual bankruptcy
Regardless of whether the individual bankruptcy is conducted in Kyiv, Dnipro or any other city, the debtor will need to prepare a whole set of documents. Thus, together with the application to the court, the following documents for individual bankruptcy must be submitted:
- a restructuring plan;
- documents confirming the identity of the debtor;
- documents confirming the presence or absence of the debtor's status of an individual entrepreneur;
- a list of creditors and debtors, the total amount of the debt, the grounds for its emergence and the repayment terms;
- an inventory of assets (indicating the location, storage of the property, as well as documents confirming ownership);
- a list of pledged property (indicating the data of each creditor of such property and its location);
- copies of documents on the debtor's transactions over the past year involving property worth more than 30 minimum wages;
- information about bank accounts opened in the debtor's name;
- a copy of the employment record book;
- information about the individual's employer;
- a declaration of the property status;
- documents confirming the payment of remuneration to the restructuring manager for the three months of performing his duties;
- information on the presence or absence of an outstanding criminal record of the debtor for economic crimes.
Cost of individual bankruptcy in Dnipro
The cost of filing for bankruptcy depends on the selected package of services, the debtor's region, the type of debt, the property, the presence of encumbrances and other factors. Absolut Law Firm will undertake individual bankruptcy cases in Dnipro, Kyiv and other cities of Ukraine.
We have a team of experienced professionals, an individual approach to every client and always reasonable prices. The bankruptcy procedure for individuals will go quickly and less painfully with qualified legal help from true professionals of their craft!