Russians will now be able to file bankruptcy

[Larry1]

Starting tomorrow:

From Oct. 1, for the first time in the country's history, millions of Russians who cannot pay back their debts will be able to file for bankruptcy.

The measure is meant to ease the financial situation of people struggling with repayments amid a deep recession, and it brings Russian law into line with similar systems in many other countries, where bankruptcy law gives rights and protections to both borrowers and banks.

However, analysts warned that the introduction of the legislation could lead to a huge number of bankruptcy cases that will strain the court system and cause serious losses to banks.

"Some unscrupulous borrowers are not repaying their loans on purpose and waiting for the new law to enter into force to declare bankruptcy," Sergei Grigoryan, head of analysis at the Association of Russian Banks, told The Moscow Times.

Before the amendments to the law, only legal entities could file for bankruptcy.

The new legislation allows Russians with total debt of more than 500,000 rubles ($7,600) and over three months of missed payments to file for bankruptcy from Oct. 1. It also imposes penalties on debtors who fail to register as bankrupt. Debtors owing less than 500,000 rubles can also file for bankruptcy if they can prove they are not able to pay the loans.

http://www.themoscowtimes.com/news/article/chaos-feared-as-millions-of-russians-gain-right-to-go-bankrupt/536324.html

I had never given this any thought before.

[alex330]

Would be interesting to find out more on who actually owns most of the consumer debt in Russia. Domestic or are there many foreign institutions in country?

[mendeleyev]

Very much domestic. Most of the international institutions have been neutered, or worse.

[Slumba]

Although bankruptcy was considered a right under the US Constitution, I have to admit skepticism that Russian bankruptcy cases will proceed in an orderly fashion.

[deccie]

Although bankruptcy was considered a right under the US Constitution, I have to admit skepticism that Russian bankruptcy cases will proceed in an orderly fashion.

One of wife's relatives went bankrupt recently. She really had no choice since her employer has cut her wages in half she could no longer service her mortgage.

But the banks are aggressive and they do hassle you. Or they sell off your debt to other less savory types.