Russian Citizens Gain Rights to File for Bankruptcy

by San Antonio Attorney

The Russian government has given their citizens the right to file for bankruptcy in an effort to ease their debt burdens.  The country is already in deep recession due to a combination of tumbling oil prices and international sanctions.

Consumers with debts higher than 500,000 rubles ($7,600) and more than three months delinquent on their payments can seek bankruptcy relief.  Additionally, debtors will be charged with penalties if they do not register as bankrupt and they cannot repay their loans.

Prior to this, only legal entities like business partnerships and companies could seek bankruptcy relief.  The concept of the new legislation is to build a platform in which consumers can reorganize their financial obligations.

Debtors who do not meet the minimum debt requirement can also register as bankrupt if they can verify they are not capable of paying their creditors, according to the nation’s news agencies.

The regulation is applicable to all kinds of loans, from mortgages to car loans and debt in a foreign currency.

Russian central bank Deputy Governor Vasily Pozdyshev said the law will provide more privileges to those in financial trouble.  It will give consumers the protection that they need from creditor harassment, according to Pozdyshev.  Unfair debt collections practices are a major problem of the people in Russia today.

The Russian bureau which monitors credit history, reported that about 580,000 people will immediately be eligible for a bankruptcy That number could be higher since there are 6.5 million people who have been delinquent on their loans for over 90 days.

With the shrinking economy and growing household debt and consumer loans, the timing of the new regulation is not unexpected.  The poverty rate in Russia has soared since its economy plummeted last year.

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