10 MYTHS ABOUT BANKRUPTCIES OF INDIVIDUALS

Development Director of the UDM Group legal company Dmitry Dmitriev told Rusbankrot about the main myths associated with bankruptcy. Is it true that in case of bankruptcy, you can lose your apartment, parental rights, and even burden your relatives with debts? The expert answers.

Myth 1: you can go bankrupt with a debt of 500 thousand rubles or more

This is not true. The bankruptcy law states that with a debt of more than 500 thousand rubles (if it is impossible to pay it), the borrower is obliged to apply for bankruptcy. If the amount of the debt is less, the borrower has the right to submit such an application. In our practice, the minimum amount of debt written off with the help of judicial bankruptcy was 170 thousand rubles.

Myth 2: a bankrupt individual cannot travel abroad

A citizen cannot leave the country only during the bankruptcy process, and even then - only if the court makes such a decision. In practice, courts rarely rule on such a ban. In our company, out of 1000 cases, a decision to ban the debtor from travelling abroad was made only in one case.

Myth 3: housing of a bankrupt will be seized

In accordance with article 446 of the Civil Procedure Code, a single dwelling cannot be seized, regardless of its size. The only exception is a pledged apartment or house. So you may really lose your mortgage housing.

Myth 4: you can go bankrupt partially

No, the bankruptcy procedure affects absolutely all debts of a person, including tax arrears, unpaid utility bills and IOUs.

Myth 5: bankruptcy debts are transferred to relatives

There is no such norm in the law. Relatives are responsible and pay the debts of the borrower only if they acted as guarantors or co-borrowers and signed the relevant documents, or after inheritance and no more than the amount of the accepted inheritance.

Myth 6: bankruptcy is a step towards deprivation of parental rights

Nobody can take away children in the event of bankruptcy. Guardianship authorities can indeed be involved, but their goal is completely different - to prevent creditors from infringing on the rights of minors; make sure that the citizen has enough funds left to keep the family. In other words, guardianship authorities, rather, protect the debtor.

Myth 7: if you have an official job or other income, you will not be declared bankrupt

This is not true. It is necessary to take into account the amount of income of a citizen and his monthly expenses: a living wage, expenses for dependents, renting housing, paying for medicines + payments on debts. If the balance is not enough to pay off the debt within three years, then a procedure for the sale of property is introduced with the possibility of further writing off the debt.

If the income is sufficient for payment, a restructuring procedure can be introduced.

Myth 8: if banks or lenders are against of the bankruptcy, it will be canceled

It is a legal right of the creditor to disagree with the decision of the court, but it does not affect the recognition of the citizen as bankrupt. The court considers the presence of signs of bankruptcy, as well as the good faith of the borrower (for example, the presence of payments). Even if creditors resist the whole process, this does not mean that the citizen will not be declared bankrupt and the debt will not be written off.

Myth 9: bankruptcy doesn't work

In Russia, 98% of bankruptcies of citizens end in debt cancellation. The remaining 2% of cases are attempts to bankrupt unscrupulous borrowers.

In 2020, Russian courts declared 119,049 citizens bankrupt. A year earlier, in 2019, 68,980 individuals went bankrupt.

Myth 10: it is cheaper and safer to find a financial manager directly (on your own)

Of course, the financial manager plays an important role in the bankruptcy procedure and it is better to have a loyal one. But, unfortunately, the agreement with "your own" manager will not have legal force, since by law he is an independent person who does not act in anyone's interests.

What is more, if there are such agreements, he can be deprived of his status - and this can happen not only on your initiative, but, for example, in another procedure that he is conducting. Then, if he loses his status, he will not be able to continue to lead your case.