Wives and children of bankrupts were offered to buy their homes for debts

Members of the bankrupt’s family will be able to buy out his share in their own apartment. The sophisticated mechanism for the priority acquisition of a share in bankrupt property, proposed by the Cabinet of Ministers in the form of amendments to the law “On Insolvency (Bankruptcy)”, should protect the interests of the families of debtors. Firstly, the wives and children of debtors will not end up on the street with suitcases and pots. Secondly, a stranger will not be able to acquire a share in the apartment. On Wednesday, the bill was defended by the Ministry of Energy before the Duma members in the first reading. In an idea that was smooth on paper, hidden “ravines” were immediately found.

Now at bankruptcy auctions the interests of all owners are already taken into account, Torosov emphasized. But to avoid disputes, the right to priority redemption of a share must be secured by law.

The head of the State Duma Committee on Property Issues, Sergei Gavrilov, added that the bill is of a very important social nature and, no joke, was developed in pursuance of the decision of the Constitutional Court. It was he who pointed out the gap to legislators: why should members of the debtor’s family bargain on equal terms for a share in their home apartment with some “Varangians”?

– We know that the issue of acquiring shares and housing conflicts is very acute and turns into a field for fraud, which often finds a court decision after many years. Therefore, the mechanism proposed (by the Ministry of Economy – MK note) is quite effective,” Gavrilov emphasized and added for understanding: at the end of last year, almost 10 million citizens in our country committed violations in servicing loans. They are not bankrupt yet, but trouble has begun.

“In general, we have a volume of such debt, which carries significant risks, almost 6.5 trillion rubles out of 30 trillion – this is the total amount of debt of our fellow citizens,” the head of the committee described the problem in numbers.

It seems like everything is working out very smoothly. And it will be good for the creditors – what difference does it make to them who ultimately repays them the debt. And it’s not bad for the relatives of the poor bankrupt – they will continue to live as they lived on their square meters. Well, the wife will buy out her husband’s share. Unless such a maneuver will have the best effect on male pride. Moreover, as Sergei Gavrilov noted, people began to actively bankrupt themselves using a simplified procedure. In general, this is a relevant bill.

Meanwhile, the Duma members immediately began to have complaints against the Ministry of Energy.

Deputy Oksana Dmitrieva asked what to do if relatives do not have enough money to buy out the bankrupt share. In rare cases, some Russian families may not have the funds to buy more real estate for themselves.

“This results in an indirect transfer of a citizen’s debts to relatives with the threat of loss of housing,” said Dmitrieva.

– If there is no money, the share goes from auction. There seem to be no options here,” Torosov snapped.

What to do if there is only one place to live?

“In this case, you know, we have a mechanism for protecting the only housing,” recalled the deputy head of the Ministry of Energy.

We really have the mechanism, we can’t take that away. The Law “On Insolvency (Bankruptcy)” stipulates the so-called executive immunity. Very good thing. It just works through the cracks and with a bunch of caveats.

The meaning of immunity is to preserve the only housing suitable for permanent residence for the bankrupt and his family.

But it’s not that simple. Firstly, that’s what immunity is for, so it doesn’t always work. In 2021, judges of the Supreme and Constitutional Courts puzzled over this issue and came to the conclusion: the only housing cannot be taken away from a bankrupt. But you can exchange it. And in general, executive immunity has limits, the Constitutional Court concluded:

“Determined by constitutionally significant values, the boundaries of the institution of executive immunity in relation to residential premises are to guarantee citizens the level of housing necessary for normal existence without diminishing human dignity,” the Constitutional Court began for health in its ruling and continued for repose: “ This, however, should not exclude the deterioration of the living conditions of the debtor citizen and members of his family on the sole grounds that the residential premises owned by him are the only ones suitable for these persons for permanent residence.”

A little later that year, the Supreme Court, when considering a dispute between a bank and a bankrupt from the Khabarovsk Territory, supplemented this position as follows: a creditor can provide a citizen-debtor with replacement housing, but only in the manner established by the court. The main thing is that such housing should be no less than the standard for the region (for Moscow up to 18 square meters per person), and preferably in the same region.

By the way, the Supreme Court especially emphasized that the relocation of a debtor should in no case become a “punitive action” or an instrument of punishment. Everything should be based only on the principle of expediency and economic feasibility. There is no doubt that banks will find both expediency and justification to recoup trillions of rubles in losses from non-performing loans. Although there were also ideas from the audience that were completely unthinkable for creditor bankers: that from a moral point of view it is impossible to take away the only housing and that it should be banned altogether.

As a result, the bill was adopted in the first reading: 349 votes were cast for the amendments and only one vote was against.