Information about bankruptcy procedures for individuals

Information about bankruptcy procedures for individuals

On December 29, 2022, the Senate of the Parliament approved the Law “On Restoring Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan”.

The law will take effect 60 days after its official publication. This means that citizens with debts will be able to file for bankruptcy in March 2023.

The law provides for 3 types of procedures - out-of-court bankruptcy, judicial bankruptcy and restoration of solvency.

All three procedures are initiated only by the debtor himself, that is, the creditor does not have the right to file for bankruptcy of the debtor.

First procedure: Out-of-court bankruptcy can be applied exclusively for debts to banks, MFIs and collection agencies.

Out-of-court bankruptcy, citizens will be able to apply under the following conditions:

     debt to Banks, microfinance organizations and collectors does not exceed 5.5 million tenge (1600 MCI);

     there is no repayment for obligations to banks, microfinance organizations, collectors within 12 consecutive months as of the date of application;

     there is no registered property, incl. property in common ownership;

     settlement with the bank of overdue debts;

     bankruptcy has not been applied for 7 years.

In addition, the bill provides special conditions for:

- TSA recipients within 6 months;

- Citizens whose debt is not repaid for more than five years.

Out-of-court bankruptcy will start on the e-government web portal. Then, through the information system, an automatic reconciliation with the data of the interested state and other bodies will be carried out in order to determine whether the debtor meets the entry criteria.

Citizens will be able to apply judicial bankruptcy for debts over 5.5 million tenge and for other types of debts.

 

The purpose of judicial bankruptcy is the maximum satisfaction of the requirements of creditors at the expense of the bankrupt's property mass.

If the only housing is the subject of collateral, then the creditor will have the right to withdraw it in the course of judicial bankruptcy.

If the only housing is not collateral, lenders will not be able to claim it.

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

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

     Administrators carrying out the bankruptcy procedure of legal entities and individual entrepreneurs;

     Professional accountants;

     legal consultants;

     Auditors.

Taking into account that not all debtors will be able to pay for the services of financial managers, the bill provides for payment at the expense of the state to persons belonging to socially vulnerable segments of the population who do not have property.

The third procedure - the restoration of solvency, provides for the possibility of obtaining an installment plan for paying debts (up to 5 years) in court, if there is 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 after it a person does not acquire the status of "bankrupt", therefore, the consequences provided for a bankrupt do not apply to him.

Consequences after declaring a citizen bankrupt:

1) a ban on obtaining loans and credits for 5 years (except for obtaining microcredits from pawnshops);

2) repeated bankruptcy is possible only after 7 years;

3) the financial condition of the bankrupt will be monitored for 3 years after bankruptcy.

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

 Department of State Revenues for Kurchum region