Tell us more about the bankruptcy and solvency restoration procedures, who can apply them?
On March 3, 2023, the Law of the Republic of Kazakhstan "On Restoration of Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan" (referred to as the Bankruptcy Law) entered into force, which was signed by the President on December 30 last year. The provisions of this law take into account the interests of both debtors and creditors, thus maintaining a balance of interests of both parties.
If we consider the law in more detail, it represents procedures according to which debtors can be released from their financial obligations not only to banks and microfinance organizations, but also to other creditors.
As part of the first procedure – out–of-court bankruptcy - citizens can apply for debt cancellation against banks, microfinance organizations and collection agencies.
But it should be noted that this procedure can be used by people who do not have property, and their total credit obligations do not exceed 1600 MCI, today it is 5,520,000 tenge. Also a prerequisite is the absence of repayment of its obligations for 12 consecutive months.
The second procedure is judicial bankruptsy.
This includes all debtors who have obligations for an amount exceeding the threshold value of 1600 MCI. Citizens who meet this criterion can file for bankruptcy in court at the place of registration.
The third procedure is called "restoration of solvency", and the debtor who went through it is not recognized as bankrupt.
This procedure can be used by citizens whose total liabilities do not exceed the value of their property.
Tell us more about the procedure for settling overdue debts.
I want to warn you that when a person files for bankruptcy, he must attach to the application a list of his creditors, as well as a document confirming an attempt to settle his debt. This procedure is clearly defined in the laws on banks and microfinance activities. Within 20 days of the occurrence of the delay, the lender notifies the borrower about it, and it is important not to ignore this notification. If you have money difficulties, then your lender can solve financial problems, and not a government agency or some other institutions that, by law, should not interfere in contractual relations between you and a bank or an MFI.
Within 30 days, the borrower must contact the lender and propose forms of settlement of the problem debt, that is, how he considers it possible to get out of this situation. This is either granting a deferral, or reducing monthly payments, changing the schedule.
This procedure is called restructuring, that is, changing the order of execution of a monetary obligation.
For example, you cannot comply with the loan payment schedule due to certain circumstances – illness or loss of a source of income. You must notify the bank in a timely manner and send him an application. The bank considers this application within 15 days, after which it agrees with your terms of restructuring, offers its alternative option, or refuses with an indication of the reasons.
What will happen if the borrower does not contact the financial institution in case of delay?
In this case, the bank will have to apply debt collection measures: use payment requirements, apply to the court, to a notary for an extract of executive documents. Each procedure, of course, has a consumable part. For example, if an application is submitted to the court, the bank pays the state fee, the bailiff also receives his share, and all these costs are included in the borrower's debt, which begins to grow, and eventually becomes an even heavier burden for the debtor.
Sooner or later, the borrower will have to comply with a court decision or the requirements of private bailiffs. The debt will not disappear anywhere, it will have to be repaid, so at the first stages it is necessary to meet the creditor halfway.
If the debtor does not contact the bank or the MFI, then the credit institution believes that he does not want to, or hides his assets and sources of income, and so on. I consider this approach to be unconstructive and recommend that all emerging problematic issues related to the payment of loans be resolved at the negotiating table with your lender.
What are the consequences for citizens who have applied bankruptcy procedures?
First of all, I want to warn Kazakhstanis who wish to apply bankruptcy procedures.
Attention! This is not a "credit amnesty" from the state – the Bankruptcy Law does not pursue such goals. Bankruptcy should be considered by citizens as an extreme, forced measure, and the developers of the Law and the authorized state bodies constantly inform about this. Bankruptcy can be applied only if all other measures have failed, when the debtor really does not have any mechanisms to reduce its debt burden.
Secondly, in no case should the Bankruptcy Law be considered as an opportunity to evade responsibility. In case of detection of this fact, for example, concealment of property and so on, administrative liability and cancellation of bankruptcy procedures are provided.
Thirdly, after applying bankruptcy procedures, a person will not be able to receive either a bank loan or a micro-loan for a five-year period, and will not even be able to act as a guarantor or co-borrower. A citizen who has the status of "bankrupt" will not be able to participate in state preferential programs for crediting vehicles or mortgages. And even after 5 years, according to the internal policies of credit institutions, lenders are likely to pay close attention to these persons.
And one more point, which is important to know – for seven years, persons with the status of "bankrupt" cannot re-apply for this procedure.
Source: Fingramota.kz