An individual himself/herself may file for bankruptcy, or a creditor, or an authorized body may petition for him/her to be declared bankrupt. It is mandatory to introduce the procedure for restructuring an individual’s debt if a court recognizes the application for declaring an individual bankrupt as justified. The court imposes the procedure for disposing of an individual’s property if such an individual has been declared bankrupt (for example, if the plan for restructuring the individual’s debt was not submitted within the prescribed period or it was not approved by the creditor’s meeting). The court may also temporarily restrict the right of the bankrupt individual to leave the Russian Federation. Further to a creditor’s application, a lawsuit concerning bankruptcy of an individual may be initiated if the following three conditions are met at the same time: - the claimed amount is no less that RUB 500 000 and it has been in arrears for three months; - as a general rule, a claim must be supported by a court decision, unless such claim (i) is based on loan agreements or notarized transactions, (ii) is confirmed by a notary’s writ, or (iii) the individual acknowledges such claim but does not repay the relevant amount; - the creditor has deposited with the court an amount to be paid as a compensation to the financial manager (RUB 10 000). The claims raised by the creditors of the individual who has been held bankrupt are satisfied out of the debtor’s entire property, including his share in common property, except for the property on which execution can not be levied pursuant to the civil legislation. Creditors’ claims that are not satisfied due to a shortage of auctioned assets would be considered redeemed. Upon the end of settlements with creditors, bankrupt individuals would be released from any subsequent liability except for a number of instances. For example, if it has been proved that the individual acted unlawfully when the obligation arose or was performed. Such unlawful acts include committing a fraud or actions aimed at fraudulently evading the settlement of amounts the individual owes to creditors, or concealing or intentionally destroying property. The law foresees certain implications of recovery procedures being implemented in relation to an individual debtor: - while the plan for restructuring is being implemented and within five years after this plan has been implemented an individual may not conceal that he or she implemented the plan. - within five years after an individual is held bankrupt he or she may not assume any obligations in relation to facility and/or loan agreements without specifying that he or she was a bankrupt. - a bankrupt individual may not for three years after the date when he/she is held bankrupt hold positions in the management bodies of a legal entity or take part in managing a legal entity in any other way.
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