The key facts

  • Out-of-court bankruptcy through the MFC is free and is completed within six months for obligations from 25 thousand to 1 million rubles
  • For five years after the procedure, the fact of bankruptcy must be indicated when concluding a credit agreement or loan
  • Restrictions on managing organizations: three years for legal entities, ten years for credit organizations, five years for a number of financial companies

What happens after debts are written off

The completion of out-of-court bankruptcy does not mean immediate restoration of access to credit: for five years, borrowers must disclose the fact of bankruptcy when applying for money. Dmitry Chelnokov, managing partner of the law firm Formula Soglasiya, told Gazeta.Ru about this.

Conditions of the procedure and its consequences

«The procedure through the MFC is free of charge and, if the conditions are met, is completed within six months. It is available with total obligations ranging from 25 thousand to 1 million rubles and the presence of grounds provided by law. A mere lack of income is not enough. Circumstances of enforcement proceedings and other conditions established for the relevant category of applicant matter. After the procedure is completed, the consequences provided for by the bankruptcy law apply. In particular, for five years, when concluding a credit agreement or loan agreement, the fact of bankruptcy must be indicated,” Chelnokov noted.

Restrictions on management and credit history

According to the lawyer, there are restrictions on managing organizations: as a general rule, three years for legal entities, ten years for credit organizations, and a five-year period is set for a number of financial companies. Information about the procedure becomes public, and banks may take it into account when evaluating future applications, but there is no single guaranteed credit rating or a mandatory rejection period for everyone, Chelnokov emphasized.

What experts advise to consider before applying

Before applying to the MFC, it is important to check which obligations can be written off, correctly list the creditors, and assess the consequences for one's own plans, the expert warned. Debt relief does not automatically extend to any claims, Chelnokov stated. In his opinion, those who expect to take out new loans or hold a managerial position soon after the procedure should prepare especially carefully. Earlier, Russians were explained whether debts can be written off if one has a salary.

Why this matters

Out-of-court bankruptcy through the MFC is a free way to write off debts, available for obligations from 25 thousand to 1 million rubles, so a wide range of borrowers can use it. However, as follows from the lawyer's explanations, the procedure imposes long-term restrictions: a five-year obligation to disclose the fact of bankruptcy when obtaining credit and bans on managerial positions in organizations. This means that the decision to file an application should be made taking into account personal plans for new loans and a career, and not only the current debt burden.