Bankrupts are pushing the boundaries – Newspaper Kommersant No. 213 (7414) of 11/17/2022

It is planned to expand the use of the mechanism of out-of-court bankruptcy of citizens – on Wednesday, November 16, at a meeting with the president, it was decided to “push” the range of debts in which you can count on their simplified write-off. Now it is 50-500 thousand rubles, after the adoption of the changes it will be 25 thousand-1 million rubles. In addition, it will be possible to go through the bankruptcy procedure again in five, and not in ten years, as it is now. Citizens whose only source of income are pensions and social benefits will also be able to use the mechanism, so the state also intends to protect targeted social support for the poor from its “flow” to creditors. According to lawyers, all these measures will allow many citizens to escape from the “financial bondage”, but may lead to higher interest rates on loans for those who pay them regularly.

The Ministry of Economy on Wednesday at a meeting with Vladimir Putin presented proposals for expanding the mechanism for out-of-court bankruptcy of citizens – following the meeting, they were supported by the president, government and the Central Bank. Recall that the essence of the mechanism launched in September 2020 is that citizens, bypassing the court, can be declared bankrupt – an individual with a debt of 50 thousand rubles or more. up to 500 thousand rubles and completed due to the lack of property by compulsory recovery, can submit an application to the MFC for recognition of it as insolvent. Six months later, if there are no grounds for terminating the procedure or creditors do not transfer bankruptcy to the courts (for example, when information about the debtor’s property becomes available), debts are automatically written off. After that, a number of restrictions are imposed on the citizen – for example, for five years he is not entitled to take loans without indicating the fact of his bankruptcy. Since the launch of such a mechanism, said on Wednesday the head of the Ministry of Economy Maxim Reshetnikov, about 12 thousand citizens with debts of 4.2 billion rubles have used it, of which 2.8 billion rubles. already written off.

Now it is planned to expand this mechanism by increasing the range of debts subject to out-of-court bankruptcy: the minimum threshold is planned to be reduced from 50 thousand rubles. up to 25 thousand rubles, the maximum – to increase from 500 thousand rubles. up to 1 million rubles

At the same time, the period for repeated out-of-court bankruptcy will be reduced from ten to five years after the first such appeal. It is also planned to admit citizens to extrajudicial bankruptcy, in respect of which the forced collection of debts has been carried out for more than seven years.

Even more significant concessions were provided by the authorities for socially vulnerable categories of the population, for whom the penalty has become, in fact, indefinite. We are talking about citizens whose only source of income is social benefits (pensioners, families with children and pregnant women living on benefits). They will be able to apply to the MFC as early as a year after the start of forced collection of debts. Let us explain that now the living wage is protected from recovery (if the debtor submits a corresponding application to the bailiffs), but in excess of this amount, income can be used to pay off debts – in such cases, citizens living on benefits can pay off the debt for decades.

It should be noted that by proposing a new approach, the state “protects” itself, as well, since it seeks to maintain the targeting of the currently expanding social support for the poor, partially protecting it from “flowing” to creditors, in particular, to banks.

Daria Ivanova, Senior Associate at the De Jure Bankruptcy Dispute Resolution Practice, recalls that the out-of-court bankruptcy procedure is aimed at reducing the burden on the courts and simplifying the procedure for citizens for whom the accepted debt burden is unbearable. “The most vulnerable category of the population are those who have no income, except for pensions and other social benefits — the classic bankruptcy procedure requires additional costs for its implementation, which increases the debt burden, but does not achieve the goals of the bankruptcy procedure,” she says. According to Daria Ivanova, the expansion of the range of debt “is justified in order to expand the number of citizens who will be able to use it.”

Vadim Borodkin, an adviser at the Orchards law firm, agrees with this, calling this decision “overdue, since the upper threshold of 500 thousand rubles. limited the write-off of debts in an out-of-court procedure in relation to debtors for whom judicial bankruptcy was absolutely unpromising. Extending the procedure to citizens who have been subject to enforcement for more than seven years, he adds, “will allow the debtor to break out of financial bondage” – those who are below the poverty line, in order to pay off the debt, would have to transfer all their income to the creditor upon voluntary execution, and if enforced, the payment of such a debt can stretch for decades.

However, Alexei Nasonov, a partner at Nasonov Pirogov law firm, says that the lack of control by the court, creditors and arbitration manager increases the risks of abuse by debtors (for example, the withdrawal or concealment of assets).

According to him, it is unlikely that the expansion of the out-of-court bankruptcy mechanism “positively affects the public consciousness, since the more instruments for default, the greater the desire not to fulfill them.” On the other hand, he adds, it is a “political choice between the interests of the population in a difficult economic situation and the interests of business in the field of retail lending.” In the short term, Mr. Nasonov believes, one can expect an increase in out-of-court bankruptcies, in the long term – risk insurance by creditors who will take into account new conditions by raising rates and increasing loan security.

Evgenia Kryuchkova, Anna Zanina