How to declare bankruptcy on your own: 7 steps

Since 2020, it has become possible to file bankruptcy for an individual, which allows you to get rid of large debts and declare a citizen financially insolvent. Registration of the procedure has advantages and disadvantages - on the one hand, with the help of such a step you can lose your debts, and on the other hand, you can lose all your accumulated property in litigation. Let’s take a closer look at the topic “bankruptcy of individuals: registration procedure and consequences” - everything related to the recognition of insolvency.

The essence of bankruptcies of an individual

The bankruptcy procedure is intended to recognize an individual or legal entity as financially insolvent, no longer capable of being responsible for existing debts and for previously given obligations. In order for a citizen to be declared bankrupt, he must meet the established criteria, which are as follows:

The totality of debts to other persons and organizations must exceed the amount of 500,000 rubles - it may include not only officially taken out loans, but also debts for housing, vehicles, loans from private institutions and from other individuals.
Before submitting an application to the court to recognize a citizen as unable to make payments, you must have a debt arrears for all types of payments of at least 3 months.

If an individual has managed to accumulate debts in the amount of 500 thousand rubles, and does not own property with a value capable of covering this amount of debt, then the bankruptcy procedure can still be carried out.

The main stages of declaring a person bankrupt

It is important to know that the process of declaring an individual financially insolvent in 2020 is very complex and lengthy. And if you simply decide to declare yourself insolvent so as not to pay the bank on the loan, leave this thought. Alternatively, you will spend the same amount of effort and money as if you had fulfilled your obligations on time. And if the court doubts your honesty, you will not only be denied bankruptcy, but may also be subject to administrative or criminal liability.

So, during the procedure the debtor goes through the following stages:

Collecting the necessary papers and drawing up an application;

The legislation does not impose any special requirements for preparing an application; it can be drawn up in any form, but with mandatory information about the debtor (full name, age, passport details, address of registration and residence, contact telephone number), debt (its amount, date of formation, time of delay), creditors, SRO (address and name).

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This is also important to know:
How does a bank bankruptcy proceed and what are the features of the insolvency stage?

An application sent to the court is subject to consideration within a period of 15 days to three months.

When submitting an application, you must pay a state fee in the amount of 6,000 rubles.

Selection of a financial manager;

At the same time as collecting documents, it is necessary to select a financial manager who will conduct the bankruptcy procedure. Before filing papers with the court, it is necessary to deposit an amount of at least 10,000 rubles into the court deposit. to pay for the services of the financial manager.

Consideration by the court of an individual’s application to declare himself insolvent;

Based on the results of consideration of the application by the judicial authority, three decisions can be made:

On acceptance of the application for production;
Leaving him motionless;
Refusal to accept for consideration;

Restructuring

If the application is recognized as meeting the established requirements, it is accepted for processing and the first insolvency procedure is introduced - Debt Restructuring (hereinafter - RDO). At the same time, information about the decision made is published in the relevant publication (Kommersant newspaper) directly at the expense of the debtor.

The essence of this procedure is to give the debtor the opportunity to pay off debts without selling property. This is achieved by providing installment plans, introducing a debt repayment plan, etc.

After the introduction of the RDO, the debtor or its creditors develop a restructuring plan (hereinafter referred to as p/r), which specifies the procedure and timing of debt repayment. The said plan is first approved by the board of creditors and then submitted to the court for consideration.

The court can approve a settlement only after the debtor has paid all current payments (alimony, state duties, remuneration to the financial manager, etc.) and the claims of first and second priority creditors related to the payment of salary, compensation for harm to life and health, etc.

Consideration of p/r by a judicial authority

Based on the results of consideration of the p/r, the court may make one of the following decisions:

About approval;
Refusal of approval;
Postponement of consideration of the issue of approval.

If the court has approved the order, its execution begins. The total period for fulfilling obligations, according to the presented plan, is three years, but can be increased by agreement or demand of creditors.

Completion of RDO

In case of fulfillment of obligations, the financial manager, no later than a month before the end of the RDO, prepares a report on the fulfillment of the p/r. After this report is approved by the court, the RDO is considered completed and the debtor’s debt obligations are repaid.

However, if the debtor has not fulfilled the p/r on time, and also if the report on its execution has not been submitted to the court for consideration, the RDO procedure may be canceled and bankruptcy proceedings may be resumed.

Sale of property

It is established for a period of 6 months, but can be increased at the request of interested parties.

This is also important to know:
Who are the participants in the bankruptcy case?

The essence of this procedure is the sale of property owned by the debtor and repayment of creditors' debts using the proceeds.

All property of the debtor, except for a certain minimum, is subject to sale. To which the legislation refers:

The debtor's only residential premises.

However, if such housing is an apartment purchased with a mortgage, it is subject to sale.

A certain minimum of personal items (cutlery, clothing, shoes, hygiene items, etc.);
Cash and products within the subsistence level

The full list of property not subject to sale is defined in Art. 446 Code of Civil Procedure of the Russian Federation.

After the sale of all possible property of the debtor, he is declared bankrupt and all debt obligations that were not covered by the sale of property are considered repaid.

Agreement between the parties

An individual debtor and his creditors have the right to enter into a settlement agreement. After it is concluded, the bankruptcy procedure is completed, after which the debtor begins to repay debts to creditors. If these obligations are violated or not fulfilled, the bankruptcy procedure is resumed and the sale of the debtor's property begins.

Pros and cons of bankruptcy

It is impossible to unequivocally call the bankruptcy process a bad or a good option for solving the problem of accumulated debts. The bankruptcy procedure for citizens includes various stages that can drag on for several years and bring only inconvenience to the debtor. The advantages of a person’s financial insolvency include:

obtaining official bankruptcy status - by court decision, all existing loan agreements are frozen, and creditors have no rights to any claims;
this procedure helps to obtain simplified monthly payments after a debt restructuring plan has been implemented;
all debts are frozen and no longer accrue interest, fines or penalties;
According to the procedure for bankruptcy of an individual, even the death of the debtor cannot be the reason for refusal - relatives can start proceedings and get rid of debts.

Possible risks and consequences of personal bankruptcy

Before filing a claim in arbitration, the debtor should weigh all the advantages that the new status promises him and objectively assess the possible negative consequences of such a decision. What are the consequences of bankruptcy?

To understand how justified an event is, it is necessary to take into account the impact of the following points:

information that a person is legally insolvent will be subject to publicity - the employer, the debtor’s colleagues, relatives and just acquaintances will know about it;
If within 36 months before the filing of the application the defendant entered into property transactions, there is a high probability that they will be canceled in court. They are recognized as fictitious, which will not benefit the defaulter;
if, in an attempt to save his property from being sold at auction, a person attempts fraud and these facts are revealed, another type of liability may arise - up to real imprisonment;
at all stages of business, all accounts and monetary assets may be frozen, and restrictions may be imposed on leaving the country;
after receiving the status, you cannot hold managerial positions or conduct business activities for 36 months;
You cannot apply for bankruptcy again within 5 years;
when trying to get a new loan, the potential borrower is obliged to inform the bank about his situation. As a result, his chances of getting funding are close to zero.

Thus, the article examined in detail how a person can declare bankruptcy on his own. When analyzing the feasibility of a procedure, before deciding on it, you should carefully weigh all available methods of action, evaluate their benefits and harms in relation to your own situation. And, of course, we cannot discount the fact that in some cases debt obligations can be transferred by right of inheritance to close people and relatives.

Insolvency procedure: step-by-step instructions

It is important to understand that according to the bankruptcy procedure for an individual, it is impossible to quickly obtain a court recognition of financial insolvency. Such a process can take years, and with the slightest mistake, the consideration can be terminated, the documents returned, and all previously taken actions will be useless. It is necessary to strictly follow the sequence of actions and check each document before submitting it, so as not to lose even more time. According to bankruptcy law, the step-by-step instructions are as follows:

Collection of necessary documents for further transfer to the court - this includes various agreements on loans, other loans, documents of ownership of real estate, transport, certificates of marital status, employment, bank account statements and others.
Payment of the state fee in the amount of 300 rubles for individuals and receipt of a receipt.
Writing an application and submitting it along with bankruptcy documents to the arbitration court. The papers are sent to an institution located at the place of residence of the future bankrupt. The application must state the reasons for the debt, list all creditors and their claims, an inventory of the property and details of the insolvency administrator.
Setting a date for the first meeting at which the circumstances and validity of the submitted application are considered, the presence of signs on the basis of which it is possible to recognize insolvency.
Purpose of one of two procedures - debt restructuring or sale of property to pay off the debt.
If a decision is made on restructuring and successful payment of debt obligations, the individual is not declared bankrupt, and the process receives the status of completed. Otherwise, if there are not enough funds to write off the debt to the list of creditors, then the process of selling real estate and other valuables begins.
The arbitration manager begins the bankruptcy procedure, in which all property represents the bankruptcy estate. The money received from the sale of the property allocated for this purpose is distributed among creditors.
After the arbitrator transfers all the proceeds to the creditors' accounts, the process is considered completed, and all remaining debts are written off.

The procedure for selling property in case of bankruptcy of an individual

Bankruptcy of individuals in most cases ends with the implementation procedure for the borrower. After the procedure, all debts are written off.

Here you need to understand very clearly what can be taken away from you and what cannot.

Art. 446 of the Code of Civil Procedure of the Russian Federation provides a list of property that is not subject to sale, but we advise you to consult with specialists before starting bankruptcy. Lawyers will tell you how to preserve your property and not be denied debt forgiveness.

In what cases is implementation assigned?

Disposition means that part of the property owned by the debtor will now be a bankruptcy estate subject to further sale. The sale of property can be scheduled after debt restructuring or immediately at the first meeting.

If the debtor does not have a permanent source of income or if such income is small, the court usually does not introduce restructuring, ordering immediate implementation.

The procedure may be prescribed if the restructuring plan:

was not represented at the meeting of creditors;
was not approved by the meeting of creditors and the court;
was canceled due to the discrepancy between the debtor’s actions and the enacted plan;
was rejected by the court.

The sale of property is not ordered if the debtor has an outstanding or unexpunged conviction for economic crimes.

What nuances arise when introducing the sale of property?

Sales are introduced for a period of up to 6 months. In practice, the court often decides to introduce implementation for a period of 4 to 6 months.
In the process of sale, the financial manager forms a bankruptcy estate and sells the debtor's property for settlements with creditors.
During the implementation process, the financial manager must check all the assets of the ward - whether there are previously undeclared real estate, securities, etc. If the manager finds something, the bankruptcy case is reviewed, and the property found will most likely also be sold.
During the sale process, the property is sold on electronic platforms, and the valuation is carried out by the financial manager. If creditors do not agree with the assessment, then an appraiser - an independent outside expert - may be involved in the case.

Sale of property under the control of a trusted financial manager. Free consultation.

Judicial practice on implementation

Often, in the process of selling property and forming a bankruptcy estate, debtors file petitions to exclude their permanent income, that is, wages, from the estate.

According to the provisions of the Bankruptcy Law, an amount of funds not exceeding 10,000 rubles may be excluded from the bankruptcy estate. In practice, the court usually excludes approximately such amounts from the bankruptcy estate, since, according to the law, debtors also have the legal right to a decent life.

Sometimes the court excludes amounts greater than 10,000 rubles. This happens, for example, if in the region where the debtor lives, the cost of living is more than 10,000 rubles, or if the debtor has dependent children.

It often turns out that the debtor has no property, except for wages and property that cannot form the bankruptcy estate (in particular, the only housing, tools for carrying out professional activities, personal belongings, household items, etc.). In such cases, after studying the report of the financial manager, the court makes a decision on bankruptcy with the subsequent write-off of all debts of the individual.

For more information about what will happen to property during bankruptcy, read the article “How not to lose property during the bankruptcy of individuals: advice from financial managers.”

Release from debt obligations

After the sale of the property, the funds are distributed to all creditors. Calculating payment amounts is the job of the financial manager.

You only need to know one thing - after completing this stage of bankruptcy of individuals, all remaining debts will be canceled, and claims of creditors (if any arise) will be accepted only through the court.

Selection and hiring of an arbitration manager

The bankruptcy procedure for individuals is regulated by Federal Law No. 127, according to which every citizen who decides to file an application for recognition of insolvency must hire an arbitration manager. The functions of such a person are that the arbitrator takes control of all financial transactions of a bankrupt citizen; he acts as a liaison, supporting the interests of both the employer and creditors.

After hiring such a specialist, the citizen can receive free consultations on what next steps he should take to complete the process. It is necessary to appoint a manager before the start of the first court hearing, since his details must be specified in the submitted application. According to the current legislation, there is one requirement for an arbitrator - he must be a member of a self-regulatory organization or have the status of an individual entrepreneur.

Law

The regulatory framework governing issues related to bankruptcy is Federal Law No. 127 of 2002.

The law includes provisions for declaring insolvency:

legal entities and individuals;
entrepreneurs;
credit organizations.

Moreover, the law establishes the stages of the procedure, their timing and features.

When considering such cases, judicial practice and certain norms of the Civil Code of the Russian Federation, the Criminal Code of the Russian Federation and the Arbitration Procedure Code of the Russian Federation are also taken into account.

Goals and objectives of the procedure

“Bankruptcy is the liquidation of an enterprise” - this erroneous opinion can often be heard among citizens who are unaware that these procedures differ from each other.
One of the differences lies in the formulation of different tasks.

Thus, the recognition of the insolvency of an enterprise is carried out for the following purposes:

Protect a legal entity or individual. a person who finds himself in a difficult financial situation. Protection comes down to restoring the payment ability of the subject of economic relations and returning to the market.
Repay obligations to creditors in order of priority, the time for fulfillment of which has already arrived.
If it is not possible to restore the company's payment ability, then debt liquidation is carried out.

Who can declare themselves insolvent?

Not only legal entities or bodies with appropriate powers (for example, the tax service), but also the debtor himself can declare the introduction of insolvency proceedings.

This is also important to know:
Application for bankruptcy of the debtor to the arbitration court: sample

To do this, you must submit applications for consideration to the arbitration court.

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It is important that you can declare yourself bankrupt only if you have unfulfilled obligations to creditors, and also if it is not enough to work as usual to repay your debts.

Applying to the court for recognition of insolvency by the debtor personally is not only a right, but also his obligation.

A legal entity can declare itself bankrupt only if the following signs are present:

The amount of debt to one or more creditors together amounts to more than one hundred thousand rubles.
Payments are overdue by more than three months.

An individual may file an application for recognition of insolvency against himself only if there are a combination of the following signs:

The amount of debt accumulated to creditors is more than 10 thousand rubles.
The payment deadline has been missed by more than three months.

Initiation of bankruptcy proceedings in relation to credit organizations is possible only after the relevant license is revoked.

Banks themselves can submit a request for a review directly.

Launch of debt restructuring

The grounds for restructuring include a large amount of property in the possession of the debtor, which can be put up for auction, and after the sale, used to write off the debt. The restructuring process, according to the rules, begins in cases where the following conditions are met:

in the absence of a criminal record under articles related to economic crimes;
no bankruptcy process has been launched over the past five years;
the debtor’s financial condition allows him to make monthly payments on loans, taking into account the balance in the subsistence level account;
the amount of income must allow you to repay debts in 36 months or enter into a payment schedule for the same period.

The grounds for restructuring are a good credit history of the citizen and the consent of the organizations issuing the loan to such a procedure.

How much does bankruptcy procedure cost?

According to the law, the cost of the procedure is determined by the period during which the proceedings will be completed and current payments. First of all, the citizen is required to pay a payment of 25,000 for the work of the manager and pay a state fee of 300 rubles. After declaring bankruptcy, you need to submit an advertisement in the newspaper, which will cost 10 thousand, and you will also need money to collect all the documents (usually 5-10,000 rubles).

If a simplified procedure for bankruptcy of an individual is applied, then the total amount of expenses is reduced to 20,000 rubles.

How much does personal bankruptcy cost?

When filing claims in arbitration, a private individual bears the costs. They are connected:

With payment of state duty - 300 rubles (clause 5 of Article 333.21 of the Tax Code).
The costs of conducting the case to the bankruptcy trustee in the amount of 25 thousand rubles as remuneration.
For each procedure that resolves the issue of bankruptcy, the manager receives a sum of money. When concluding a settlement agreement - 25 thousand rubles, restructuring - 25 thousand rubles, selling property and sending money to pay off debts - 25 thousand rubles.
In case of restructuring, the debtor pays 7% of the total amount to the financial manager in the form of remuneration.
Publication of information about bankruptcy in a unified register - 402.5 rubles each (in each case from 6-7). This procedure is mandatory and is carried out to notify creditors; information is available online via the Internet.
Additional costs for paying for banking services, holding auctions for the sale of property, sending letters to creditors and the Arbitration Court (within 2-3 thousand rubles).

According to an analysis of judicial practice, the debtor spends within one proceeding with restructuring from 50 thousand rubles plus 7% of the debt amount. In its absence - up to 50 thousand rubles . A negative verdict is issued by the authority if the amount owed to the banks is less than 500 thousand rubles. If a refusal is received, but the applicant believes that the decision is unlawful, he has the right to challenge it in a higher authority.

This is also important to know:
LLC bankruptcy: consequences for the director and founder

The consequences of bankruptcy are: a ban on conducting management activities and individual entrepreneurs, organizing a business for 3 years, purchasing shares, canceling all previous transactions with property (the last 3 years).

Bankruptcy term

Before you begin the process of declaring financial insolvency, you need to realize that this process may take a long time. The first consideration of the case takes up to three months, restructuring takes up to 4 months, but the process of selling property can take up to 9 months. The period may increase due to the filing of petitions based on court decisions, but on purpose, no party to the process will delay the consideration.

The procedure for declaring an individual financially insolvent can bring both positive and negative consequences. Before starting it, you need to carefully consider the current situation, look for another way out, and only then resort to litigation and obtaining bankruptcy status.

What is needed to file bankruptcy

When applying to an arbitration court to obtain bankruptcy status, a citizen fills out an application and collects documents confirming his insolvency.

This is also important to know:
How much does bankruptcy of an individual cost?

The application is drawn up by the plaintiff personally. It contains:

in the upper right corner - the name of the judicial authority, personal information about the applicant (last name, first name, patronymic, registration and actual residence address, telephone);
the line below, in the middle, is the name of the document - application for bankruptcy;
the descriptive part indicates the request to establish bankruptcy, indicating the arguments proving the legality of the procedure;
the line below is a list of attached documents;
in the lower left corner is the date of preparation, in the lower right – the signature of the individual.

Documents are attached to the application:

copy of the passport;
a copy of the insurance certificate and TIN;
a copy of the marriage certificate, marriage contract, if available;
loan agreements confirming the fact of debt;
extract from the register of entrepreneurs (whether the applicant is registered as an individual entrepreneur);
information about the presence or absence of real estate (extracts from the Unified State Register of Real Estate, certificates of registration of property rights;
an extract from the register of shareholders, if the applicant is the owner of securities;
2-NDFL certificates;
bank statements on the availability of personal accounts;
results of a medical examination if the cause of debt was illness.
a receipt confirming the fact of payment of the state duty.

After sending the application and documents to the arbitration court, the citizen is given the right to pay off debts through restructuring and sale of property. If these procedures do not save the plaintiff’s position, the process of declaring him bankrupt begins. .