Bankruptcy to the rescue: a way out for those who are mired in debt

If you have collected a lot of credits and cannot return them, then you have several options. For example, hiding from a creditor bank or an MFI. This is a bad decision. Its consequences: a damaged credit history, growing penalties and fines, and, finally, the likelihood of being brought to court after your creditor filed a lawsuit there.

Another option is to apply for restructuring. Here, the bank can meet a person halfway if he finds himself in a difficult situation for objective reasons, reduce monthly payments and suspend the accrual of penalties. But usually the grace period lasts a maximum of six months, and then the debts still have to be repaid. Therefore, restructuring is suitable only for those who are sure that their solvency will be restored. Otherwise, it is not a way out, but simply prolonging the problem.

And finally, people who have no hope that they will be able to repay the loan can go bankrupt. This is done through the court or out of court (through the MFC). After filing for bankruptcy, fines will no longer be charged and the borrower will no longer be bothered by collectors. And after six months, when the procedure is over, the debts will be written off and you can start your financial life from scratch. The main thing here is not to repeat past mistakes and not to continue taking loans thoughtlessly.

Experience shows that people are very lacking in information on personal bankruptcy. The main thing that they do not know and do not understand is that during the bankruptcy procedure it will not be possible to lead the same life.

When submitting an application to the court, the borrower must report all transactions in excess of 300 thousand rubles that he has made over the past three years.

Some of them the manager (a specialist who conducts bankruptcy proceedings) may challenge. And if the court agrees with this, then the parties will return to their original position: that is, the sold property will return to the borrower and it will be included in the bankruptcy estate. The buyer of this property will be among the creditors. He will be able to return his money only if they are enough for all creditors.

The law does not exactly spell out which transactions are dubious. Let us give a few examples to understand the general train of thought of lawyers.

✔ Contracts of sale, in which the price is much lower than the market price. For example, the debtor sold his car for 400 thousand rubles, while similar cars cost at least 600 thousand rubles.

✔ Imaginary transactions (usually they are made between close relatives). Suppose the borrower sold his apartment to his parents, and he continues to live in it.

✔ Purchases, due to which the bankruptcy estate has greatly decreased: simply put, the person has less money that could go to settle accounts with creditors. The borrower buys a “beautiful” car registration number for half a million (by the way, this transaction is illegal in itself).

✔ Choice of one lender from several. For example, the debtor has three loans in different banks. Suddenly, he suddenly makes early payments on one of them and files for bankruptcy. Such transactions can be challenged if they were made within six months before the start of bankruptcy.

✔ Strange payouts. For example, the debtor enters into an agreement with his ex-wife on the payment of alimony, according to which their amount is 90% of his income. The practice is strange. It may be pushed by the fact that alimony arrears belong to the first priority of creditors. This means that almost all the money will go to the former family, and nothing will be left for the bankruptcy estate.

And the most dramatic thing: the completed bankruptcy case may be reconsidered. If the creditor learns that the debtor hid his property, he will file a corresponding application with the court. And then the bankruptcy procedure can be started anew, and the debts that have been written off will be restored.

Bankruptcy can go in two ways: debt restructuring or the sale of the borrower’s property. The first option is possible if a person has something to repay debts, but simply in a more benign schedule. From the moment the debtor is declared bankrupt, interest, fines, and penalties cease to accrue. The debt is fixed and must be repaid within three years.

The second method is used when a person has no money. Depending on the option chosen, the future bankrupt has the right to manage his money differently.

During restructuring, every month he can withdraw no more than 50 thousand rubles from his account. It is realistic to take a large amount, but only if it is approved by the financial manager. And in the second option, the debtor does not have the right to dispose of his own funds at all. The manager monthly gives him money in the amount of the living wage.

It is clear that all these options are quite painful for a person, and the best scenario is, in principle, not to fall into debt bondage. Let me give some advice to those who want to avoid such a scenario.

✔ Getting a loan should not be an emotional decision. Think about why you need money and is it not easier to save up for this thing or service on your own. It may take time, but you will avoid a significant overpayment and the need for monthly payments to the bank.

✔ If you still decide to take a loan, calculate its size so that subsequent payments amount to no more than 30% of the family budget.

✔ Carefully study the terms before signing the contract. Ask the manager to make a preliminary calculation of monthly payments indicating the amount of the final overpayment. These figures sober many potential borrowers and they refuse to go into debt.

✔ Find out if additional services are included in the contract, primarily insurance. Look for banks where you can get a loan without it. By law, the borrower is not required to buy a policy. The only exception is real estate insurance for mortgages.

✔ Do not agree that insurance is included in the “body” of the loan. Many banks do this by default. As a result, you have to return not only the loan itself, but also the cost of a useless policy with interest.

✔ If you decide that you really need a loan, contact the bank, not microfinance organizations. MFIs issue loans at huge interest rates, and at the slightest delay they charge such fines that the debt then grows like a snowball. Don’t pay!

✔ If, nevertheless, you received a loan, and then it turned out that you had nothing to pay, then there is no point in hiding from the lender or taking a new loan in the hope of repaying the existing one. So you will only make the situation worse. Think about whether you can restore your solvency in the foreseeable future (maximum within six months). If yes, then you can try to negotiate with the bank on restructuring. But you need to understand that even at this time you will have to make payments, albeit in a smaller amount. If there is no way to repay the loan in principle, then bankruptcy remains the only way out.

The bankruptcy procedure is not at all joyful and not entirely simple, but for people who do not have money, it is the only way to write off loans, stop communicating with collectors, and free themselves from an unbearable debt burden. After that, you need to learn how to carefully plan your income and expenses, live within your means and try not to take new loans.