The main purpose / Main goal of personal bankruptcy is recognition of the person by the bankrupt and realization of his debts. Recognition of person  insolvent and meeting requirements of creditors takes place in bankruptcy proceedings in two ways. The first way is applied in case if the debtor answers with the property to creditors. The second way is applied in case if the debtor doesn’t answer with the property, and meets requirements feasible payments by installments. The application for recognition of person by the bankrupt can be submitted not more often than 1 time a year.

The main condition for filing of application is the begun execution title or other administrative production, for example sale of property or assignment from the salary.

Except an above-mentioned main goal of bankruptcy of the person is compensation of liabilities to creditors who will be satisfied gradually. Gradually means that obligations are paid to each creditor from a total amount of a debt according to debt size.

A. Bankruptcy proceeding

The first step in bankruptcy of person is filing of application in the court – in a place of registration of the debtor. The application is submitted personally. For a while so far to the debtor the financial managing director his interests isn’t appointed the lawyer or the lawyer of the Center of legal aid represents.

It is necessary to enclose to the application:

• CV, with relevant personal information,
• lists of creditors,
• levy of execution of the debtor,
• the documents confirming existence of debt
• declaration of insolvency
• the judicial resolution on the begun executive title
• payment of the competitive (financial) managing director of 500 euros. Payment is carried out by the Center of legal aid.

In the procedure of bankruptcy of the person the court within 15 days will declare the person a bankrupt and will make the decision on discharge of debt obligations of the debtor. The court will establish the competitive (financial) managing director who undertakes to provide necessary information to creditors – trustee. After recognition of the person by the debtor article about recognition of the person by the bankrupt is published in the Commercial bulletin. After adjudication about recognition of the person by the bankrupt  for the debtor which has begun before decision about recognition of the person  by the bankrupt stops. After decision about recognition of the person by the bankrupt creditors are obliged to exercise the right for repayment of debt obligations the debtor which will be gradually paid only if the debtor has a property sufficient on repayment of such debts.

The list of the debtor’s property includes movable and immovable property, the owner of which is the debtor. The exception is the financial resources received by the debtor’s work during the bankruptcy procedure and the amount of 10.000 euros from the amount of immovable property of the debtor in which the debtor resides.

After the procedure for the sale of property, the procedure for paying the debt to the creditors comes in accordance with the established plan.

Completion of bankruptcy proceedings

Completion of bankruptcy proceedings takes place in three ways:

• the competitive (financial) control field of the procedure for selling the debtor’s property within 6 days will prepare a plan for the implementation of payment of arrears. The competitive (financial) manager – trustee will pay the amounts owed to creditors, after which an article on the completion of the bankruptcy proceedings will appear in the Commercial bulletin
• If during the term of sale of the debtor’s property, the competitive (financial) manager finds that the debtor’s property is insufficient to realize the payment of debts, an article on the completion of the bankruptcy proceedings will appear in the Commercial bulletin

If within 90 days after making a court decision on declaring a person bankrupt, none of the creditors declare their subjective right to satisfy their debt obligations, an article on the completion of the bankruptcy proceedings will appear in the Commercial bulletin

B. Plan to restructure the debts of a person

The debtor applies for payment by installments to the court of general jurisdiction at the place of registration of the debtor. The application must contain:

• CV ,
• lists of creditors,
• inventory of the debtor’s property,
• documents confirming the existence of debt, the grounds for its occurrence,
• documents confirming the debtor’s solvency,
• judicial decision on the initiated judicial proceedings.
• documents confirming the debtor’s solvency for the last 5 years,
• documents confirming the debtor’s solvency for 5 years,
• income statements for the last 5 years
• information about bank accounts

Protection of the debtor to creditors.

The court within 15 days from the day of filing an application for declaring a person bankrupt provides legal protection of the debtor to creditors. Legal protection is manifested in the fact that judicial proceedings on the affairs of the debtor are temporarily suspended. Within 15 days the debtor is obliged to pay a monetary reward to the competitive (financial) manager in the amount of 500 euros.

Payment by installments of payments.

Within 45 days the competitive (financial) managing director will provide the plan of restructuring of debts of the person, in the presence at him a constant source of income. The plan of restructuring is formed for 5 years so that payment by installments of payments couldn’t be turned on objects of use and activity and the only housing of the debtor. The sum of satisfaction of liabilities can’t be lower than 30% of the sum of debt of each creditor.

The end of the plan of restructuring.

A) The competitive (financial) managing director – trustee will publish article about insolvency of the debtor due to the lack of income or property which could be sold in the Commercial bulletin.

B) The competitive (financial) managing director- trustee can postpone payment by installments of payments indefinitely. In this case creditors can appeal to court to which the law allows to realize the mechanism of full removal of debts.