The draft law on the bankruptcy of individuals has been published for public discussion
Today, a significant number of citizens are facing a deterioration in their financial situation. The reasons are different: loss of work or ability to work, a decrease in the level of well-being against the background of the general economic downturn and the introduction of quarantine measures for coronavirus infection.
According to the information of the Credit Bureau, today more than 1 million citizens have committed loan repayment violations. A number of citizens have arrears on utility bills (2.9 million people for 20.5 billion tenge), taxes (791.1 thousand people for 20.0 billion tenge), there are also 142 thousand executive documents in the amount of 4 billion tenge returned, due to the absence of the debtor's property.
The solvency of these people should be restored, for which the mechanism of bankruptcy of citizens is proposed.
Pursuant to the instruction of the Head of State, dated January 5 of this year, the Ministry of Finance of the Republic of Kazakhstan resumed work on the introduction of the institution of bankruptcy of individuals. This was announced during a briefing in the CCS on February 9, 2022 by First Vice Minister of Finance Marat Sultangaziev.
The speaker also spoke about the current situation on the Bill:
- On January 20, a working group was created from among the deputies of the Majilis of the Parliament, members of public associations, as well as representatives of interested state bodies.
- On February 1, the Concept for the Law and the draft Law were posted on the portal of "Open NPAs";
- On February 3, the Concept and draft Law were sent to members of the Public and Expert Councils;
- On February 4, the Concept for the draft Law was considered at the interdepartmental commission on legislative activity.
Taking into account the significance of the draft law being developed, the SRC of the Ministry of Finance of the Republic of Kazakhstan expressed readiness to consider all constructive proposals.
The developers proposed 3 bankruptcy procedures for citizens
Taking into account international experience, it is proposed to introduce 3 types of procedures, depending on the amount and duration of the debt. This was announced during a briefing in the CCS on February 9, 2022 by First Vice Minister of Finance Marat Sultangaziev.
The first procedure
Restoration of solvency provides for the possibility of obtaining installments in court to pay debts (up to 5 years), if there is a stable income. The recovery plan is developed jointly with the financial manager and approved in court (with debts exceeding 5 million tenge). This requires the consent of both parties (debtor and creditor). Anything that is not provided for by the plan, such as the sale of property, then these measures are not applied.
The second procedure
If there is no stable income and prospects for debt repayment, it is proposed to apply out-of-court bankruptcy
The out-of-court bankruptcy procedure can be applied in 3 cases:
The first is Citizens who have overdue payments to banks and micro-credit organizations for more than 5 years;
The second is Citizens, if the debt is not repaid within 12 months. In this case, the amount of debt should not exceed 300 thousand tenge (100 MCI) and there is no property at the expense of which it is possible to repay the debt.
The third is also that citizens who have a debt in the amount of up to 5 million tenge (1600 MCI) has not been repaid within 6 months can start bankruptcy proceedings.
A citizen submits an application for out-of-court bankruptcy through the e-Government web portal. It will also be possible to submit documents through the application "E-salyk Azamat".
After receiving the documents, an automated check for compliance with the requirements will be carried out (absence of property, compliance with the terms of delay, etc.).
The third procedure
Judicial bankruptcy will be applied by citizens for outstanding debts over 5 million tenge (1600 MCI).
During this procedure, the debtor's property is subject to sale at auction.
The proceeds are used to repay debts to creditors in accordance with the established order.
If the only housing is the subject of collateral, then the creditor will have the right to withdraw it during the bankruptcy proceedings.
If the only housing is not a pledge, creditors will not be able to claim it.
The remaining outstanding amount is subject to write-off, provided there are no signs of dishonesty of the debtor (concealment of property or information about it, provision of false information, etc.).
However, alimony debts and damage caused to the life and health of another person are not subject to write-off.
Bankruptcy of individuals: what are the consequences?
During a briefing in the CCS on February 9, 2022, First Vice Minister of Finance Marat Sultangaziev spoke about the consequences that arise after the bankruptcy of individuals.
First, the project provides for a restriction on obtaining loans and credits for 5 years.
Secondly, the draft also provides for a restriction on leaving the country for 3 years, with the exception of treatment, accompanying a close relative for treatment or going to a funeral.
Citizens will be able to re-apply bankruptcy only after 7 years.
Therefore, before declaring bankruptcy, a person should think about the possible consequences and limitations.
In general, the application of bankruptcy will allow individuals to get rid of the debt burden and begin to conduct active economic activity.