The law provides mechanisms for settling an individual's debt through extrajudicial bankruptcy, insolvency restoration, and judicial bankruptcy.

All three procedures are initiated solely by the debtor; that is, a creditor does not have the right to file for bankruptcy.

First procedure: Extrajudicial bankruptcy can only be used for debts to banks, microfinance organizations, and collection agencies.

Citizens may apply for extrajudicial bankruptcy under the following conditions: 

1) Debt to banks, microfinance organizations, and debt collectors does not exceed 5.5 million tenge (1,600 MCI);

2) No payments have been made on any debts to banks, microfinance organizations, or debt collectors for 12 consecutive months as of the application filing date;

3) No registered assets, including jointly owned assets;

4) Overdue debt has been settled with the bank;

5) Bankruptcy has not been filed for seven years.

Furthermore, the bill provides special conditions for: 

• recipients of the automated social assistance program (ASP) for six months; 
• citizens whose debt has been outstanding for more than five years.

Out-of-court bankruptcy proceedings will be initiated on the e-government web portal. The information system will then automatically verify the debtor's data with relevant government and other agencies to ensure that the debtor meets the entry criteria.

For debts over 5.5 million tenge and other types of debt, citizens can apply for judicial bankruptcy.

The purpose of judicial bankruptcy is to maximize the satisfaction of creditors' claims from the bankrupt's estate.

If the sole residence is collateral, the creditor will have the right to seize it during the bankruptcy proceedings.

If the sole residence is not collateral, creditors will not be able to claim it.

The remaining outstanding amount is subject to write-off, provided there is no evidence of bad faith on the part of the debtor (concealment of property or information about it, provision of false information, etc.).

The bankruptcy procedure is carried out by financial managers, which may include:

• Administrators handling bankruptcy proceedings for legal entities and individual entrepreneurs;
• Professional accountants;
• Legal consultants;
• Auditors.

Considering that not all debtors will be able to pay for the services of financial managers, the bill provides for state payment for individuals belonging to socially vulnerable groups who lack property.

The third procedure—restoring solvency—provides the possibility of obtaining a court-ordered payment plan for debts (up to 5 years), provided they have a stable income.

The recovery plan is developed jointly with the financial manager and approved by the court. The advantage of this procedure is that it does not result in the individual being declared bankrupt, and therefore does not involve the consequences of bankruptcy. Consequences of being declared bankrupt:

1) a ban on receiving loans and credits for 5 years (except for microloans from pawn shops);

2) a second bankruptcy is only possible after 7 years;

3) The bankrupt's financial status will be monitored for three years after bankruptcy.

Debts for alimony, compensation for harm caused to the life and health of another person, and compensation for damages due to criminal offenses are not subject to write-off.