Personal Bankruptcy

Personal bankruptcy may be considered when an individual is objectively unable to meet financial obligations and ordinary debt resolution methods do not solve the problem.

Before starting bankruptcy proceedings, it is important to analyse not only the amount of debt but also creditors, property, income, enforcement proceedings, previous transactions and the nature of the obligations.

Bankruptcy should not be treated as an automatic way to eliminate every debt. It is first necessary to determine whether judicial or out-of-court bankruptcy is available and what consequences the procedure may have.

As a general rule, after completion of settlements with creditors, an individual declared bankrupt is released from further performance of creditor claims, but Russian law provides important exceptions.

Claims relating to current payments, child support, compensation for harm to life or health, salary and severance payments, compensation for moral harm and other claims inseparably connected with the creditor’s personality remain in force. The law also contains special exceptions for certain claims, including subsidiary liability and some claims for damages.

In addition, a court may refuse to release the debtor from obligations where dishonest or unlawful conduct established by law is proven. Before bankruptcy, it is therefore necessary to determine which particular obligations may actually be discharged.

Legal basis: Article 213.28 of Federal Law No. 127-FZ.

When the asset realization procedure is introduced, property owned by the debtor on the date of bankruptcy, as well as property subsequently identified or acquired within the limits established by law, generally forms the bankruptcy estate, except for property protected from enforcement by law.

Before bankruptcy, real estate, vehicles, ownership interests, funds and other assets should therefore be analysed separately, together with any applicable exemptions.

Where property is jointly owned by spouses, bankruptcy may also affect the debtor’s share in that common property. Russian law provides mechanisms intended to protect the property interests of the non-bankrupt spouse when common property is sold.

Legal basis: Articles 213.25 and 213.26 of Federal Law No. 127-FZ.

It is important to distinguish between a debtor’s only residence suitable for permanent living and a residence that is subject to a mortgage.

In circumstances established by law, a debtor’s only suitable residence may be protected by enforcement immunity. However, mortgaged property is subject to a special legal regime, and the fact that a mortgaged apartment is the debtor’s only home does not automatically prevent its realization.

Since 2026, Russian bankruptcy law separately regulates distribution of proceeds from the realization of a debtor’s only residence where that property is mortgaged. Mortgaged real estate should therefore be analysed separately before filing for bankruptcy.

Legal basis: Articles 213.25 and 213.27-1 of Federal Law No. 127-FZ and Article 446 of the Russian Civil Procedure Code.

Yes. Federal Law No. 127-FZ provides an out-of-court personal bankruptcy procedure through a multifunctional public services center where the statutory conditions are met.

As of September 2026, the total amount of monetary obligations and mandatory payments counted for this procedure must be at least RUB 25,000 and no more than RUB 1,000,000.

The debt amount alone is not sufficient. The individual must also meet at least one of the grounds expressly provided by Article 223.2 of the Bankruptcy Law. Eligibility should therefore be assessed based on the individual circumstances and status of enforcement proceedings.

Legal basis: Article 223.2 of Federal Law No. 127-FZ.

Personal bankruptcy may release an individual from certain debts but also creates statutory consequences.

For five years after completion of the asset realization procedure or termination of the bankruptcy case during that procedure, an individual taking a loan or credit must disclose the fact of bankruptcy. During the same period, restrictions apply to starting another bankruptcy case on the individual’s own application.

Russian law also imposes restrictions on participation in management of legal entities: generally three years, with longer special periods for certain financial organizations. These consequences should be considered before starting bankruptcy proceedings.

Legal basis: Article 213.30 of Federal Law No. 127-FZ.

Yes. The right to apply to a Russian arbitrazh court for an individual to be declared bankrupt belongs not only to the individual but also to a bankruptcy creditor and an authorized state body.

As a general rule, an application for an individual’s bankruptcy is accepted where the claims amount to at least RUB 500,000 and have remained unpaid for three months after they became due, unless the Bankruptcy Law provides otherwise.

Where bankruptcy is initiated by a creditor, the debtor should assess not only the amount of debt but also property, previous transactions, evidence and possible consequences of the procedure.

Legal basis: Article 213.3 of Federal Law No. 127-FZ.