Simplified bankruptcy procedure for individuals: how to go through the MFC

The Internet has long been flooded with news that citizens who cannot cope with their debt burden will be able to go through bankruptcy proceedings for free and without the participation of the court. And so, on July 31, 2021, Federal Law No. 289-FZ “On Amendments to the Federal Law “On Insolvency (Bankruptcy) and Certain Legislative Acts of the Russian Federation Regarding Extrajudicial Bankruptcy of a Citizen” was signed and published. This law will come into force on September 1, 2021.

When introducing the bill, it was stated that the adoption of the federal law would help reduce the burden on the courts and increase the accessibility and efficiency of bankruptcy for citizens. In this article we will analyze the procedure for free (simplified) bankruptcy and see if this is really so and whether this novelty was created for people.

What is simplified bankruptcy?
Who can undergo simplified (out-of-court) bankruptcy?
Required documents
The procedure for registering simplified bankruptcy through the MFC
Consequences of accepting an application for declaring bankruptcy under a simplified procedure
Consequences of simplified bankruptcy

Standard and simplified bankruptcy

Since 2015, Russian citizens have been able to declare themselves bankrupt. Previously, only legal entities were granted this right. But after the introduction of the law, people did not rush to submit applications en masse, although this was the intention. And there are several reasons for this:

this is a complex procedure that takes at least 6-8 months;
the process requires financial investment. Usually it costs 40,000 - 50,000 rubles;
due to many legal subtleties, citizens cannot cope on their own and hire companies that also need to be paid;
limit on the total amount of debts - from 500,000 rubles. They may consider an application for a smaller amount, but a positive outcome in this case is rare;
the case was decided in the Arbitration Court. If for a resident of a large city this is not a problem, then otherwise it is already problematic.

As a result, only a few citizens applied to the Arbitration Courts and became bankrupt. Usually these were people with really large debts, for whom the financial costs of the procedure were more than covered by the amount of debts written off. And often these were generally wealthy citizens who could spend money on it.

The procedure was inaccessible to ordinary people, and it was they who suffered the most from the onslaught of banks, collectors and bailiffs. Therefore, simplified bankruptcy of individuals was introduced in 2021. And now this is a real opportunity to get rid of debts.

Over 9 months of 2021, more than 5 thousand out-of-court bankruptcies were launched

From September 1, 2021 to September 30, 2021, multifunctional centers (MFCs) published messages about 5 thousand 120 initiated extrajudicial bankruptcy procedures for citizens. The number of returned applications amounted to 7 thousand 920 over the same 9 months. Accordingly, the share of started procedures is 39.3%. In March-September 2021, the MFC published messages about the completion of 2 thousand 801 simplified bankruptcy of citizens.

The amount of citizens' debt declared for write-off for 9 months of 2021 is 1 trillion 781.7 million rubles in the processes started through the MFC. Of these, 985.5 million rubles were written off at the beginning of October. The period allotted for the remaining procedures has not yet come to an end.

The leaders in the total number of initiated extrajudicial procedures for the year - from September 2021 to September 2021 - were:

Omsk region (327 cases),
Chelyabinsk region (256 pieces),
Perm region (179 events),
Krasnodar region (163 hits),
Altai Territory (159 applications),
Lipetsk region (155 submitted documents),
Samara region (144 cases),
Republic of Bashkortostan (140 pieces).

Conditions for simplified bankruptcy from 2021

The standard judicial procedure takes place in accordance with Federal Law 127. Simplified bankruptcy of individuals from 2021 is dictated by Federal Law 289. These are two completely different procedures. And most importantly, the new law allows citizens to become bankrupt completely free of charge.

Basic conditions for simplified bankruptcy of individuals:

The total amount of declared debts is within the range of 50,000 - 500,000 rubles.
Only those debts for which the bailiff has closed the case can be written off.
Debts to banks and microfinance organizations, taxes, traffic police fines, etc. are eligible.

As for alimony, it is legally impossible to get rid of it using this procedure.

Let's draw conclusions. Since 2020, the simplified personal bankruptcy system only applies to debts that have been subject to litigation. The bailiff opened enforcement proceedings, which were closed due to the impossibility of collection under Article 46 Part 1 Part 4.

Peculiarities of consideration of a case in the absence of a debtor

Our specialists are ready to advise you on all issues related to bankruptcy, including in relation to an absent debtor.

When signs of an absent debtor are identified in bankruptcy

This is an important point. The applicant can immediately indicate the absence of the defaulter and provide evidence. You can refer:

on a judicial act declaring a citizen missing;
on materials of enforcement proceedings, if the search by the bailiffs did not bring results;
for the absence of transactions on the organization’s accounts over the past 12 months;
for other signs confirming the lack of information about the defaulter.

If the application immediately lists these signs, a simplified scheme will be used in case of bankruptcy of an absent debtor.

The fact of absence can be revealed even after the initiation of bankruptcy proceedings. That is, the creditor submits an application according to the general rules, indicating information about the place of residence or stay of the debtor-citizen, or the legal address of the enterprise.

When the manager determines that it is impossible to obtain information about the whereabouts of the debtor, he submits an application to the court and asks to introduce a simplified procedure. In the application, you can refer to requests within the bankruptcy case, to the materials of the manager’s work.

Algorithm of actions of creditors

Bankruptcy under a simplified procedure for an absent debtor involves skipping some procedures.

Step-by-step instructions for bankruptcy of an absent citizen:

an application is submitted, evidence of amounts and periods of debt;
if the arbitration court finds the application justified, it will open a case and appoint a manager;
a register of creditors' claims is formed;
the manager carries out mandatory measures to search for the bankrupt’s assets and check his transactions for previous periods;
if property is found, it is sold at auction;
based on the results of the sale, the proceeds are distributed - the costs of the bankruptcy case begin to be covered, the remainder is paid to creditors;
Based on the manager’s report, the arbitration court makes a decision to write off the debts of an individual.

If a legal entity goes bankrupt, an entry about the liquidation of the company is made in the Unified State Register of Legal Entities. After this, creditors have the right to bring the founders of this company to subsidiary liability.

Procedures for simplified bankruptcy

There is no debtor, which means there is no point in carrying out such stages of bankruptcy as external management, restructuring, recovery.

With a simplified scheme, the following procedures are applied:

consideration of an application from an authorized body or creditor;
creating a register of requirements;
search for assets - requests to government agencies and banks;
sale of assets;
revenue distribution.

The absent debtor in a bankruptcy case will not present documents about his property and income, and will not give explanations on the transactions made.

The manager actually conducts a unilateral inspection in these areas. For example, requests must be made to Rosreestr and the State Traffic Safety Inspectorate to obtain data on real estate and vehicles. Banks are asked for information about accounts and deposits, and account statements are analyzed to see what the money was spent on and where it was transferred.

Who pays the costs

The costs are paid by the applicant-creditor or an authorized body (Federal Tax Service).

The application must confirm the availability of funds to finance expenses and remuneration and their source. If the Federal Tax Service or another authorized body applies to arbitration, the costs of conducting the case are paid from the budget.

Revenue distribution

The order of satisfaction of creditors' claims in the event of bankruptcy of an individual. facesArticle on the topic

At this stage, the distribution of funds from the sale of assets, account balances and deposits of the bankrupt occurs.

For this purpose, the general rules of priority according to 127-FZ are applied. Priority is given to paying off the costs of running the business, paying remuneration to the manager and paying off current obligations.

If there are funds left after this, they will be used to pay off debts to creditors.

Completion of bankruptcy and its consequences

At the final stage of bankruptcy, arbitration considers the manager's report. Based on the answer, the following decisions can be made:

on recognizing debts as bad and writing them off;
refusal to release debt obligations;
on the liquidation of a legal entity and making an entry in the Unified State Register of Legal Entities;
on deregistration of an individual entrepreneur and making an entry in the Unified State Register of Individual Entrepreneurs;
on bringing the controlling persons of the debtor to subsidiary liability.

Debts on loans and microloans, taxes, and housing and communal services can be written off from an absent debtor. In any case, debts for alimony, compensation for harm and damage will not be written off. For these types of obligations, the right to collection will remain even after bankruptcy is completed.

According to Article 51 of Law No. 127-FZ, the total bankruptcy period cannot exceed 7 months. In practice, it can be more or less than 7 months, since it depends on the actions of the manager and the duration of the sale of assets.

If you have any questions or require assistance in bankruptcy with an absent debtor, please contact our specialists. We will help even in the most difficult situation!

What does st 46 h 1 p 4 mean?

This means that the bailiff closed the case due to the impossibility of collection; only in this case will the simplified bankruptcy system for individuals work. The bailiff cannot endlessly collect debts and conduct business. If there is nothing to take from the debtor, he closes the proceedings due to the impossibility of collection under this article.

Article 46 applies if there is nothing to take from the debtor (no accounts with receipt of money, no official income and no property suitable for seizure), or if it is impossible to establish the whereabouts of the debtor. Most often we are talking about the first case.

As a standard, the bailiff returns the writ of execution to the claimant, but he has the right to send it back to work. As a result, the same business can be opened and closed several times. And the simplified bankruptcy procedure for an individual becomes a tool to stop the back and forth of the case.

Is it worth involving lawyers in the process?

Filing bankruptcy of an individual through the court is a costly procedure both in terms of money and time.

The main task of the insolvency procedure is to carry out the social rehabilitation of the debtor, to give him the opportunity to legally write off old debts and start a new life. You can go all the way on your own, but it is best to entrust bankruptcy on loans to professionals.

At Bazhena Consult we help our clients save time and money, build a bankruptcy strategy and find an experienced financial manager. We study each situation individually, so we do not use template solutions and always take into account the interests of the applicant.

Already at the first free consultation, lawyers will assess the prospects and chances of success. They will develop a detailed strategy and estimate how much bankruptcy will cost. In their work, our specialists are guided by the principle of transparency, so you will always be aware of financial expenses.

Moreover, we do not include unnecessary options in the cost of services, so our prices are affordable to everyone. Pay as convenient for you - in installments up to 1.5 years, without prepayment, equal payments, or even irregularly when the financial situation stabilizes. We always meet halfway and negotiate payment terms individually with each client.

To avoid wasting time and money, choose a turnkey bankruptcy service. Experienced lawyers will monitor all stages of the procedure, take part in court hearings, protect your interests and help you obtain bankruptcy status with minimal costs.

Simplified bankruptcy of individuals through the MFC: documents

Everything is carried out through the MFC. Moreover, it does not matter where the applicant is registered, you can submit an application at your place of residence. The package of documents cannot be compared with what is required in a judicial procedure. It includes only 3 points:

Applicant's passport, TIN and SNILS.
A list of all debts for which enforcement proceedings have been terminated. Compiled by a citizen in free form.
A document from the bailiff stating that the enforcement proceedings in the declared case have indeed been terminated.

You can view all the proceedings opened against you in the FSSP online database. The contact details of the bailiffs who deal with these matters are also indicated there.

Please note that the cancellation will only apply to those debts that you indicated in the application and which were written off under Article 46. Unreported cases (that suddenly surfaced later) will not participate in the case.

Bankruptcy of a specialized company or mortgage agent

Specialized organizations are understood as financial organizations, as well as project finance institutions. These organizations are engaged in the collection of debt obligations and the redirection of funds for the implementation of investment projects through the purchase of monetary claims for obligations associated with the sale of property created during the implementation of such projects. An application for bankruptcy of an organization is submitted by the owner of the securities based on a decision of the general meeting of owners.

How it's going

Simplified bankruptcy through the MFC begins with the fact of a citizen’s application. He comes with the necessary documents and lists of suitable debts, and talks about the purpose of the visit. An MFC employee will print out an application form where you need to enter all the data. He will help you write your appeal correctly.

Bankruptcy procedure for an individual through the MFC:

Contacting the multifunctional center, writing an application. Here you will be given a prescribed form where you need to enter all debts.
All information is verified within 3 working days. If everything is really so, if production is really closed under Article 46 and has not yet been resumed, things move on. The applicant is entered into the bankrupt register.
The simplified out-of-court bankruptcy itself lasts 6 months. During this time, the debtor is monitored, his property is searched, and transactions are monitored. If nothing is found, the debts will be permanently written off.

During the proceedings, cases cannot be reopened. If we are talking about credit and tax debts, penalties and other charges on them are completely suspended.

Cost of bankruptcy: free - how much?

Article 223.7. Free procedure for extrajudicial bankruptcy of a citizen

(introduced by Federal Law dated July 31, 2020 N 289-FZ)

Consideration of an application to declare a citizen bankrupt out of court in a multifunctional center for the provision of state and municipal services is carried out without charging a fee.

Inclusion of information in the Unified Federal Register of Bankruptcy Information in accordance with this paragraph is carried out without charging a fee.

Federal Law of October 26, 2002 N 127-FZ (as amended on December 30, 2020) “On Insolvency (Bankruptcy)” (as amended and supplemented, entered into force on January 2, 2021)
Read in full

Source

The law directly states that you do not need to pay for anything - the write-off takes place without state duties or publication fees.

The amendments ensured the availability of debt forgiveness for low-income citizens. If the bailiffs have already concluded that collection is impossible, there is no point in conducting a second analysis as part of an expensive legal procedure.

Bankruptcy is a benefit for the debtor

But if you intend to go through the process for free, then you must prove that there is nothing to take from you at all.

Debtor's property and income

There are important points regarding property. If, during a six-month audit, valuable property subject to recovery is found, or legal income is discovered, bankruptcy will be impossible. Simply put, it turns out that the bailiff “missed” this and closed the case illegally. Therefore, it can be opened again at the request of the owner of the debt.

Similarly: if during these 6 months it is discovered that a citizen has acquired valuable property or began to receive legal income, bankruptcy will not be approved. In addition, during this period, a citizen is prohibited from taking out loans and becoming a guarantor.

What happens after bankruptcy

If everything goes well, the declared enforcement proceedings will no longer be opened, and the debts are written off. But the law on simplified bankruptcy of individuals speaks of some restrictions that will affect the citizen.

In general, for the average person they are not at all critical. For the next 5 years, you cannot take out new loans without telling the lender that you previously filed for bankruptcy. You cannot hold managerial positions with legal entities for 3 years, appear in the management bodies of a credit organization for 10 years, and non-state pension funds, insurance companies, mutual funds, and investment funds for 10 years.

A simplified bankruptcy procedure for an individual is truly a solution for many debtors. The procedure is not complicated and free; many citizens can do it. Well, if the total debt exceeds 500,000, then only the standard judicial procedure will do.

Consequences of refusal to liquidate a debtor in bankruptcy

The Bankruptcy Law talks about the administrative, legal and property legal consequences of refusal to liquidate the debtor through bankruptcy.

The administrative and legal consequences will be that if there is a refusal to liquidate the debtor in bankruptcy, then an entry will not be made in the Unified State Register of Legal Entities about the liquidation of the debtor, and accordingly the debtor will be considered active. As we know, a person is considered to have ceased his activities when an appropriate entry about this is made in the Unified State Register of Legal Entities, in this case about liquidation.

The property and legal consequences of refusal to liquidate in bankruptcy are that the owner of the debtor’s property, the director and chairman of the liquidation commission (liquidator) will bear subsidiary liability for the fact that the claims of creditors are not satisfied (applies to monetary obligations and payment of mandatory payments).

FAQ

How do simplified bankruptcy procedures work, in short?

You need to contact the MFC at your place of residence, provide the necessary documents and wait for verification first 3 days, then another six months.

Does the simplified bankruptcy scheme for individuals apply to individual entrepreneurs?

Yes, if a citizen is an individual entrepreneur, he can also apply for debt forgiveness under Federal Law 289. If a citizen ceases to be an individual entrepreneur within a year before filing an application, he cannot become an entrepreneur for 5 years after receiving bankrupt status.

How many debts can ultimately be written off?

The number is not limited by law. There can be as many of them as you like within the total amount of 500,000 rubles.

Will my application be accepted if I have official income?

The law does not provide any restrictions on this matter. But in general, the bailiff will not close the case if the debtor has income that can be used to pay off the debt. And if they are discovered during an inspection after filing for bankruptcy, the case will be closed.

What is needed for simplified bankruptcy?

The only condition is the closure of enforcement proceedings on the reported cases at the time of contacting the MFC.

Sources:

Federal Law-127 On insolvency (bankruptcy).
FZ-289. On amendments to the Federal Law “On Insolvency (Bankruptcy).
MFC: How to file bankruptcy through the MFC without court or state fees.

about the author

Irina Rusanova - higher education at the International East European University in the direction of "Banking". Graduated with honors from the Russian Economic Institute named after G.V. Plekhanov with a major in Finance and Credit. Ten years of experience in leading Russian banks: Alfa-Bank, Renaissance Credit, Home Credit Bank, Delta Credit, ATB, Svyaznoy (closed). He is an analyst and expert of the Brobank service on banking and financial stability. [email protected]

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Required documents

The law establishes only two mandatory documents that are necessary for a simplified bankruptcy procedure: an application and a list of creditors.

At the time of writing this article, the form of an application for insolvency (bankruptcy) in the “simplified” form has not yet been determined. At the same time, based on our extensive experience in supporting court cases, we believe that it would be reasonable to indicate in it the grounds for the occurrence and amount of the debt, the reasons for its occurrence, and justify your insolvency. If drafting documents causes you difficulties, it is better to contact a bankruptcy lawyer.

As for the list of creditors, the requirements for its content are specified in paragraph 4 of clause 3 of Article 213.4 of Federal Law No. 127-FZ: name of the organization or full name. creditor-individual, amount of debt, location (legal address) or place of residence of the creditor; arrears on obligatory payments arising as a result of the citizen’s entrepreneurial activity are entered in a separate line. The Ministry of Economic Development of Russia has developed a special form for the list of creditors, which is quite understandable for people, into which they only need to enter the necessary information (see Order of the Ministry of Economic Development of Russia dated 05.08.2015 N 530 “On approval of forms of documents submitted by a citizen when applying to court with an application for recognition him bankrupt").

Please note that judicial bankruptcy requires the provision of a whole package of documents in addition to the insolvency application: personal documents, documents confirming the debtor’s property status, documents confirming the basis and amount of the debt, and others. Free bankruptcy frees the debtor from the need to spend time collecting evidence due to the fact that the issue of his solvency at the time of filing the application was investigated by bailiffs.

Comments: 14

Your comment (question) If you have questions about this article, you can tell us. Our team consists of only experienced experts and specialists with specialized education. We will try to help you in this topic:

Author of the article Irina Rusanova

Consultant, author Popovich Anna

Financial author Olga Pikhotskaya

Maximus
10/01/2021 at 01:36 There are no delays yet, but I quit one job and have another where they pay 10,000 rubles in total. I understand that it is not possible to pay an amount of 50,000 thousand next month. What to do and how to solve this issue??
Reply ↓ Anna Popovich
02.10.2021 at 00:07
Dear Maximus, contact the lender with an application for debt restructuring or consider refinancing (the most profitable options are selected at this link).
Reply ↓

Natalia
08/21/2021 at 13:38

Hello. If my official income is 6,400 per month, I have child benefits of 1,200 per month, and my total loan debt is approximately five hundred thousand. There are no late payments yet. Can I submit documents for a simplified bankruptcy procedure through the MFC?

Reply ↓

Anna Popovich

Dear Natalya, if the bailiffs close the enforcement proceedings because they cannot write off your debt, you can apply for simplified bankruptcy.

Reply ↓

Lalita
07/22/2021 at 16:00

In the bailiff service, all enforcement proceedings are closed, clause 3, part 1, art. 46. Can I contact the MFC to formalize an out-of-court bankruptcy procedure? What is the difference between paragraph 3 and paragraph 4 in Article 46?

Reply ↓

Anna Popovich

Dear Lalita, in accordance with paragraph 3, the bailiffs were unable to establish the location of the debtor, his property or obtain information about the availability of funds and other valuables belonging to him in accounts, deposits or deposits in banks or other credit organizations, except in cases when this Federal Law provides for the search for the debtor or his property. Paragraph 4 means that the bailiffs have established that there is no property that can be foreclosed on. You can initiate bankruptcy proceedings if the debt amount is up to 500,000 rubles and there is no new enforcement proceedings.

Reply ↓

Natalia
04/18/2021 at 15:35

The scammers issued me a loan for 400,000 rubles. a trial was held and I was ordered to pay, since a third party was not found, and I am a pensioner, a pension without social benefits of 8300, almost 70 percent is withheld from me. There is nothing to pay for the apartment for food and that is out of the question. The bailiffs have not closed the case, the trial took place 2 months ago, can I count on the bankruptcy procedure?

Reply ↓

Anna Popovich

Dear Natalya, if you own property that can be foreclosed on, then you cannot declare yourself bankrupt.

Reply ↓
Natalya
04/19/2021 at 09:54

I only have an apartment, no property.

Reply ↓
Anna Popovich
04/19/2021 at 14:53

Dear Natalya, in judicial practice there are cases and ways of interpreting legal norms that can lead to the possibility of foreclosure on the only housing. Therefore, before initiating bankruptcy, consult with a specialized lawyer.

Reply ↓

Olga
04/16/2021 at 14:03

If the debt is 1,700,000, can I file for bankruptcy?

Reply ↓

Anna Popovich

Dear Olga, yes, but you do not have access to a simplified procedure, and you must recognize the arbitration court as incapable of fulfilling financial obligations and making payments to creditors.

Reply ↓

Alexander
04/03/2021 at 07:18

Is it possible to submit an application within 500 thousand rubles if the total debt in closed bailiff cases is 700 thousand

Reply ↓

Anna Popovich

Dear Alexander, no, the total debt should not exceed 500,000 rubles.

Reply ↓

Expert assessment

The law has caused a mixed reaction among experts - lenders and economists - with banks and experienced trial lawyers still speaking out against a number of provisions.

We propose to consider the most common objections.

Fraud risk
. If a citizen completed enforcement proceedings a year ago, he may well take out a couple of microloans, or borrow a new 50 - 100 thousand rubles, and immediately write them off, because new productions have not yet been opened.
Banks fear that many conscientious borrowers will want to take advantage of the opportunity to write off the loan burden for minor debts.
Now there is a crisis, and people’s incomes are really declining, but if previously citizens went to the bank for restructuring or credit holidays, now it is more profitable for them to sit without work in order to bring the situation to bankruptcy and write off debts for housing and communal services, small loans, taxes and fines.
Banks asked for a delay in the introduction of simplified bankruptcy, at least for six months; they need to adapt internal mechanisms to the changed circumstances. Obviously, the additional risk of non-repayment of loans forced the Central Bank to tighten lending requirements. For example, people who are already open for use. production, getting a loan in 2021 will be almost impossible.
The law began to work in the fall of 2021. There has been more work at the MFC, and especially at the FSSP - creditors are demanding a more careful inspection of the assets of the debtor and his husband/wife, challenging the return of the debt. leaf. Where to get personnel from, given the workload and low salaries of bailiffs, is not explained.

But these are problems for creditors and government officials. In general, the law provides an opportunity to get rid of eternal debt for people who could not afford bankruptcy before 2021:

And this:

Poor and low-income citizens.
Disabled people and other people living on social benefits.
People who have lost their jobs or a permanent source of income, including individual entrepreneurs.