Kazakhstan has introduced a personal bankruptcy procedure aimed at restoring citizens’ solvency and reducing their debt burden. This mechanism allows debtors to manage their financial situation.

What is individual bankruptcy?

Individual bankruptcy is a legal procedure applied when a citizen is unable to repay debts under their obligations. It provides for the restructuring or discharge of a citizen’s debt in accordance with specific requirements.

In the Republic of Kazakhstan, this procedure includes:

• out-of-court bankruptcy;
• court-administered bankruptcy;
• restoration of solvency is carried out in accordance with established procedures.

Who is eligible for out-of-court bankruptcy?

The out-of-court bankruptcy procedure may be used by individuals who meet the following requirements:

• debt to a bank, microfinance organizations, or collection agencies;
• a loan repayment term of more than 12 months;
• non-payment over the past 12 months;
• lack of assets;
• debt collection measures have been taken.

For citizens from socially vulnerable groups, certain requirements may be relaxed.

Court-Administered Bankruptcy Proceedings

Court-administered bankruptcy proceedings are used if the individual has assets or if the amount of debt has reached a critical level. In this case:

• The court reviews the debtor’s financial situation;
• An inventory of assets is compiled;
• Obligations to creditors are settled in accordance with the law.

During the proceedings, the debtor’s assets may be sold, and the proceeds used to repay the debt.

Restoration of Solvency

This procedure allows a citizen to pay off debts in installments without declaring bankruptcy. A payment schedule will be approved by the court, and the citizen will repay the debt within a specified period.

Consequences of Bankruptcy

Declaring an individual bankrupt has a number of consequences:

• Access to credit will be restricted for 5 years;
• The ability to file for bankruptcy again is limited to a specific period;
• Financial status may be monitored.

Therefore, before filing for bankruptcy, it is necessary to carefully assess all legal and financial consequences.

Source : https://www.gov.kz/memleket/entities/kgd-zhetysu/press/news/details/1230651?lang=ru