In plain words
Bankruptcy (банкротство физического лица, bankrotstvo) is a legal way to get rid of debts you cannot repay. A court or an MFC (multifunctional public service centre, МФЦ) declares you insolvent, your property (except what the law protects) is sold, the money is shared among the creditors, and the remaining debts are written off. After that, restrictions apply for several years.
It is a last resort. First try to agree with the bank on restructuring or credit holidays.
Two ways: via an MFC or through the court
- Via an MFC (out of court). Free of charge, takes about 6 months. It fits if your total debt is from 25,000 to 1,000,000 ₽ and, as a rule, you have no property or income from which the debt can be recovered: for example, the bailiffs have closed the enforcement proceedings because there is nothing to recover. There are also special cases — for pensioners and benefit recipients whose enforcement proceedings have lasted more than a year.
- Through the arbitration court. Fits any amount of debt. You must file if the debt exceeds 500,000 ₽ and you have not paid for more than 3 months. The court appoints a financial manager who runs the case. The procedure usually takes from six months to a year or longer.
What you keep and what gets sold
The law protects your only home (unless it is mortgaged), ordinary household items, clothes, things you need for work, and part of your income no lower than the subsistence minimum for you and your dependants. A second flat, a car, a dacha and valuables can be sold. The manager checks transactions from the last three years: a car given to relatives can be returned and sold.
Worked example
Ivan owes 1,200,000 ₽ to banks and microfinance organisations (МФО, MFO), earns 60,000 ₽ after tax and has no property. The amount is too large for an MFC, so he files with the court.
- A deposit of 25,000 ₽ is paid to the court for the financial manager's fee. Plus the costs of publications and postage.
- While his property is being sold, Ivan keeps the subsistence minimum. For simplicity let's take 18,939 ₽ — in your region and for your group it may be different.
- Each month 60,000 − 18,939 = 41,061 ₽ goes to the creditors. Over a 6-month procedure that is 246,366 ₽.
If the court completes the case and releases Ivan from his debts, the remaining roughly 954,000 ₽ will be written off.
Consequences and common mistakes
- Restrictions. For 5 years you must disclose the bankruptcy when applying for a loan and cannot file for bankruptcy again; for 3 years you cannot manage a company. The record goes into your credit history.
- Not all debts are written off. Alimony, compensation for harm to health, wages owed to employees and subsidiary liability remain.
- Don't hide property. If the court sees bad faith — hidden income, property transferred to others, loans taken with false information — the debts will not be written off.
- Check who you hire. Promises to “write off your debts in 3 weeks with no consequences” are a warning sign. Information about every procedure is published in the Unified Federal Register of Bankruptcy Information (Fedresurs).
In Russia, Kazakhstan and Belarus
Russia
The procedure is set by Law No. 127-FZ. Through the court — for any amount of debt if you cannot pay; it is mandatory if the debt exceeds 500,000 ₽ and payments are more than 3 months overdue. Free of charge via an MFC (multifunctional public service centre, МФЦ) — for debts from 25,000 to 1,000,000 ₽ and under special conditions.
Kazakhstan
Since 2023 Kazakhstan has had a law on restoring solvency and bankruptcy of citizens («О восстановлении платёжеспособности и банкротстве граждан»): it provides out-of-court bankruptcy, court bankruptcy and a solvency restoration procedure.
Sources: Federal Law No. 127-FZ on Insolvency (Bankruptcy) («О несостоятельности (банкротстве)»), Unified Federal Register of Bankruptcy Information («Единый федеральный реестр сведений о банкротстве»), Gosuslugi, the government services portal («Госуслуги»)