When starting a business, an entrepreneur must take into account the risk of bankruptcy.
Most of the failed transactions in the market are due to a lack of financial resources caused by blocked payments. Debts can make a significant contribution to the deterioration of a company's financial condition. Therefore, it is worth learning a few tips to help you avoid negative consequences regarding payments.
Description of the process
Judicial consideration of a bankruptcy case begins after filing a corresponding application with the Arbitration Court. Moreover, an insolvent borrower, creditor or fiscal department has the right to submit such a paper. The size of the requirements for the debtor to initiate bankruptcy proceedings is not fundamental here, but the legislation has established a certain financial minimum for such cases.
Sometimes initiating a bankruptcy case is the borrower’s only chance to get out of the debt hole
Please note that the court considers the arguments presented by the parties and makes a decision based on the facts presented . For this reason, it is appropriate for a defaulter who initiates a case on his own to prepare a documentary basis for submitting evidence to the court.
During the proceedings, the reins of control of the defaulter's finances pass to the financial attorney. In addition, creditors have the right to challenge financial transactions carried out by the debtor over the past three years.
The bankruptcy process is allowed once every five years. Accordingly, in such situations it is appropriate to think carefully about the consequences of such a decision. The procedure for such proceedings involves four stages:
- restructuring proposal;
- assessment and seizure of property;
- amicable agreement between the parties;
- making a bankruptcy decision.
Moreover, the course of the process allows hearings lasting 6–9 months. This period allows you to go through the listed steps and verify the debtor’s insolvency. Let us consider the details of the mechanism for considering such cases.
Chance for rehabilitation
The content of the proposal is as follows: the court records what amount of claims is presented to the defaulter, and gives the opportunity to pay creditors in installments. Moreover, this option is used in situations where the borrower receives regular income . It should be noted that both the defaulter and the creditor have the right to develop a schedule for such repayments.
Payment restructuring is a chance for the debtor to restore business reputation
However, there is an important nuance here: the borrower’s earnings here are sufficient to cover regular payments and provide a living wage . Such agreements are implemented for any period, no more than three years. The final decision remains with the court, although creditors have the right to discuss the project and make amendments.
Inventory and confiscation
If the previous stage confirmed the citizen’s economic insolvency, the second stage of the procedure . Here the appraiser or financial attorney begins to inventory the property of the defaulter. Such actions make it possible to identify valuables and collateral property in order to later sell these things to pay off the arrears.
An inevitable stage in bankruptcy is the inventory and sale of the borrower’s valuable property
Let us note that the collateral of the property is sold first . In addition, valuables and luxury items are subject to recovery. The debtor risks losing even his only home if the apartment is purchased with a mortgage and a minor is not registered there. Thus, the court partially satisfies the creditors' claims. However, if there is not enough proceeds to cover the accrued arrears, the balance is written off.
Agreement between the defaulter and creditors
During the process, the court offers the parties to conclude a settlement agreement. However, such a practice is rare, because an important condition for such a procedure is the confidence of the participants in the process in fulfilling the agreed conditions. The procedure is available at any stage of the case .
Results of the decision
The last stage is the adoption of a court decision on the case under consideration.
If during the review process the court determines that the debtor is insolvent, a verdict is issued regarding the bankruptcy of this person.
As a result, debts that have accumulated up to this time are cancelled.
True, the defaulter will not be able to write off current payments.
Please note that the consequences of a court decision on financial insolvency also have negative sides. Now the bankrupt has no right to hold leadership positions and is obliged to inform potential creditors about the new status for five years . In addition, certain economic sanctions are imposed on the borrower while the case is being considered.
Here, accounts and transactions are frozen, asset management is transferred to an authorized person, and a ban on traveling abroad appears.
Thus, the procedure that seems to be the optimal solution involves certain difficulties and restrictions for the potential bankrupt. In addition, initiation of hearings is likely in situations where the amount of debt for bankruptcy of an individual complies with the standards established by law. Let's look at this nuance below.
What is personal bankruptcy
The availability of credit is causing a real stir. Every second citizen takes out a loan to purchase a car, household appliances, housing, vacation and other goods. But the financial situation of some borrowers is very unstable, paying off the debt becomes an unbearable burden, and the situation often ends up in court proceedings.
Attention! From the point of view of the legislation of the Russian Federation, bankruptcy is an official confirmation of the debtor’s insolvency regarding issues of full compliance with creditors’ claims.
The purpose of bankruptcy is to satisfy the claims of creditors at the expense of the defaulter’s property, to restructure the debt, or to sign a peace agreement between the parties. Bankruptcy of individuals person implies a number of measures and requirements, as a result of which one can be freed from an unsustainable debt burden, taking into account the insolvency law.
That is, every person can exercise the right to be considered bankrupt. To do this you will need to meet certain criteria.
A person can be considered bankrupt on the basis of Federal Law No. 127 of October 26, 2002 “On Insolvency”. The standard includes 230 articles and 12 sections.
Amount of arrears to start the procedure
Keep in mind that it will not be possible to declare complete financial insolvency with a minimum amount of debt. A bankruptcy case is initiated if the claim against the debtor is at least 500,000 rubles . Moreover, in such situations, the defaulter has not made payments for at least 90 days, and the financial situation of this person does not allow him to pay off creditors. This is stated in paragraph 2 of Art. 213.3 Federal Law No. 127 .
The amount of debt for bankruptcy of an individual is specified in Federal Law No. 127 and is 500,000 rubles
It should be noted that legislators are developing a separate project regarding the lower limit of this amount. After all, an arrears of half a million is a critical figure for most citizens . Moreover, in situations where a person suddenly loses his ability to work, even 200,000 becomes an unaffordable amount. However, this innovation has not yet been adopted, so citizens have access to the procedure under the conditions described above.
Please note that in addition to the established minimum arrears, it is appropriate for the borrower who initiates the procedure to expect repayment of the services of the manager, payment of state fees and legal costs.
Sometimes this amount does not correspond to the economic capabilities of the citizen. In such situations, the court meets the defaulter halfway and offers payment in installments. However, without paying the state duty, which will cost 6,000 rubles, the claim will not be accepted. Take this nuance into account.
Today, amendments to the law have been developed to reduce the minimum debt established for citizens.
Keep in mind that bankruptcy of legal entities is a more democratic procedure. Here it is enough to accumulate an arrears of 300,000 rubles . This point is enshrined in Article 6 of the Federal Law “On Financial Insolvency (Bankruptcy)” .
The necessary conditions
Now let’s briefly go through the list of requirements that the court imposes on defaulters in such situations. The key task for the debtor is to prove personal insolvency . This criterion includes the following features:
- termination of financial payments after the final settlement date;
- the debtor paid less than 10% of the arrears from the date of actual completion of the transaction;
- the amount of an individual's debt is greater than the value of that person's property;
- there is a decree from the relevant department about the absence of collateral property.
Please note that if loan payments are not overdue and the final payment deadline has not arrived, the insolvency of the applicant-debtor is called into question. However, the actual inability to pay bills or the anticipation of such a fact is a reason to initiate bankruptcy proceedings.
The main requirement for a defaulter when filing an application for bankruptcy is that the financial situation corresponds to the realities and payment of the necessary court fees
To start consideration of the case, the defaulter will need to submit an application to the Arbitration Court and support this paper with documentation confirming the correctness of the defaulter. This list is specified in Art. 213.4 and consists of the following positions:
- evidence of the occurrence and accumulation of arrears;
- confirmation of the financial insolvency of the borrower;
- an extract from the state register to determine the status of the debtor;
- a list of creditors indicating the specific amount of obligations for each item;
- a detailed inventory of the defaulter’s property;
- documentation of transactions carried out over the past three years;
- papers on income and payment of taxes by the borrower for 3 years;
- certificates of financial accounts in banks, securities, deposits;
- other documentary evidence of the borrower’s words.
Accordingly, the main requirement for the debtor is the argumentation of the current economic situation while observing the minimum level of accumulated late payments . It should be noted that the court always provides a chance for the rehabilitation of such debtors, offering restructuring of payments of a fixed amount.
The stated facts will need to be supported by documentary evidence.
This solution becomes a solution for people whose earnings allow gradual settlement with creditors and partial payment of the balance of the accrued amount. Considering that banks practice a constant increase in interest and fines for such debts, the Arbitration Court simply determines the specific amount of arrears and orders the development of a project for payments in installments. This nuance works in favor of the defaulter and allows you to restore your business image.
Steps of action
If, despite all the measures taken, it turns out that the contractor is unreliable, you should act immediately. The first step is to send confirmation of receipt and payment request by registered mail. Once confirmed, the taxpayer will have one more piece of evidence which will certainly prove useful during any legal proceedings.
Seeking professional help is usually the last resort that entrepreneurs usually resort to. Debt collection is usually a procedure after which further business contacts most often become impossible. On the other hand, if the contractor turns out to be completely unreliable, such professional help may be a necessity.
So, as you can see, protecting yourself from bankruptcy caused by blocked payments is quite possible. It's better to protect your transactions from the very beginning. Thanks to this, it will be easier not only to prevent possible problems, but also from the very beginning to create a base of contractors who will be reliable and honest in their cooperation.
