Today in the Parliament the draft law which will help thousands of Ukrainians to get out of a debt abyss is pending. The bill “On restructuring the debts of individuals or recognizing them as bankrupts” has been prepared on the basis of the analysis of the best practices of the institution of bankruptcy in the world, taking into account Ukrainian realias. Among its initiators there are MPs of the Samopomich Union faction.
Ruslan Sydorovych, Samopomich deputy, member of the Parliamentary Committee on Legal Policy and Justice, spoke of the benefits this law will bring to many Ukrainians, who for various reasons are not able to service their debts.
One of the serious structural problems in Ukraine is the debt of individuals. In fact, this phenomenon is rather common, but in Ukraine this problem is particularly relevant given the economic crisis. Moreover, foreign currency borrowers are a prime example of this problem, but they are not the only one who have got into a debt trouble.
In fact, this concerns a large number of our citizens. Someone are unable to service their debts due to a loss of work, some have lost their health and are not able to be engaged in income-generating activities anymore. Here and there a farmer or a small business owner has taken out a relatively small loan but he or she is now unable to serve it. And banks are robbing such citizens blind. While by reconstructing their debts and wisely engaging the assets they possess, entrepreneurs could be able to pay off the debts keeping their property, and in the future they could be among those people who do not live off the state, but, on the contrary, make it develop.
First of all, this bill creates a mechanism under which even despite creditor’s objections the restructuring plan can be approved by the court. In fact, we are creating an institute of protecting the individuals from the creditors.
If individuals see that they are unable to pay off their debts, but they possess certain assets at the expense of which they can restructure the debts and settle them in the long run, they can apply to the court on their own requiring opening insolvency proceedings at the same time filing a debt restructuring plan. And if such a plan is approved by the court, the case is dismissed. That is, individuals are guaranteed that if a desirable plan is not approved, in any case they will be able to return to where they started.
Secondly, we offer a special procedure for the repayment of debts of individuals who are owners of a single accommodation. This mainly concerns the foreign currency borrowers who took a mortgage on an apartment and due to their debt may end up living in the streets. This is not only an economic but also a social problem. Because generation of an army of homeless in today’s conditions is irresponsible towards the citizens and it threatens to create an extremely high social tension.
This bill solves this problem: individuals receive a different accommodation of a lower quality, but they do not remain without a roof over the warm corner. That is, we provide housing for those citizens who are unable to serve their loans, but their debts will be considered canceled.
To prevent abuse by unscrupulous individuals, the draft law provides for certain precautions. Thus, if relatives of a person who might be recognized as insolvent, are registered under the ownership of the property worth an amount greater than the sum of the debt, such a person cannot be recognized as a bankrupt. These relatives do not bear financial responsibility, but in such a way we are fighting against the phenomenon of making property over to brothers, sisters, parents, etc. Another important step which will also prevent abuse is the creditor’s ability to appeal the contracts concluded by the debtor over the course of the year before the bankruptcy proceeding is initiated. This would also prevent attempts to simply hide assets from creditors.
In the end, adoption of the bill would allow citizens to “zero out” the debts, set the methods of protection of individuals from creditors, which, unfortunately, do not exist today. The document will contribute to the improvement of the financial situation in the state, will reduce the number of debtors and increase the number of people who have hope in the future.