In October 2019, a new Bankruptcy Code of Ukraine entered into force. Now, an ordinary citizen has the opportunity to restructure debts and restore solvency. Or declare yourself bankrupt.
In this article, we examined the general bankruptcy procedure, its stages, pros and cons.
But the question also concerns currency debtors.
According to the Deposit Guarantee Fund of individuals, more than 50% of mortgage loans in foreign currency are problematic. Due to the crisis and the devaluation of the hryvnia, people have no way to repay them.
This is one of the reasons why the question of the bankruptcy of individuals was raised at the level of the law.
The Code does not divide debtors into “currency” and “hryvnia”. In general, everyone can exercise the right to restructuring and bankruptcy. But for foreign currency borrowers there are still nuances.
Lifting moratorium on housing recovery
Since 2014, the Law “On a moratorium on the recovery of property of citizens of Ukraine provided as security for loans in foreign currency” has been in force in Ukraine. It is also called a moratorium on “collecting forex mortgages” or “on evicting foreign currency borrowers.”
This law prohibits the collection of collateral from currency debtors if:
- this is the only and permanent housing of the debtor (guarantor)
- or an object of incomplete construction, provided that it has no other real estate in the mortgage and the debtor (guarantor)
- area does not exceed 140 square meters. m for an apartment and 250 square meters. m for a residential building
In fact, foreign currency borrowers were insured against the loss of mortgage housing.
But the new Bankruptcy Code cancels the moratorium. Although not immediately, but in a year - in October 2020.
Perhaps these legislators wanted to create an additional incentive for borrowers. And motivate them to solve debt problems through restructuring or bankruptcy under the new Code.
Features of the restructuring for foreign currency debtors
Part 5 of the Final and Transitional Provisions of the Code outlines restructuring rules for foreign currency borrowers whose only housing is in a mortgage.
Within 5 years from the date the Code comes into force, such debts are restructured according to the procedure for restoring solvency of individuals. persons according to a restructuring plan or a settlement.
In essence, the procedure will be the same as for ordinary “non-currency” debtors. Except for the features described below.
Exchange rate at which the amount of debt is considered
This rule will not especially please debtors who took foreign currency loans at the rate of 5-8 hryvnia per dollar.
Because the composition and size of monetary claims of the creditor are determined at the rate set by the National Bank of Ukraine at the time of opening the insolvency case.
In fact, if the debtor took a loan of $ 70,000 at the rate of 8 UAH. per dollar, and at that time it amounted to 560 000 UAH., then on the difference in rate the debt "increased" to
1 694 000 UAH! This amount will be restructured.
Composition of debt and adjustment of its size
Neither penalty nor other penalties are included in the amount of debt. And if the debtor has previously paid off part of the obligations, then the size of the debt is proportionally reduced.
The timing
Restructuring can be set for 10 and 15 years. Timing is tied to the area of mortgage housing.
For a 15 year restructuring plan
If this is an apartment, then its total area should not exceed 60 square meters or not more than 13.65 square meters. m in living space per family member. If a residential building - no more than 120 square meters. m
For a 10 year restructuring plan
The area of the mortgage apartment or house should be more than 60 square meters. m and 120 square meters. m respectively.
Interest
They are also tied to the area of mortgage housing.
If the area is not more than 60 square meters. m (apartment) and 120 square meters. m (house), then the debt sets the interest rate in the amount of: Ukrainian deposit rate index physical. persons per year in hryvnias + 1%.
If the area exceeds 60 square meters. m (apartment) and 120 square meters. m (house), then the interest rate: Ukrainian index of rates on deposits physical. persons per year in hryvnias + 3%.
This norm has already raised questions.
It is not clear what deposits are in question: in hryvnias or currencies. The difference between them is significant. The rate on deposits in hryvnia is 15.93%, in dollars - 3.01% (November 2019).
There are suggestions that the choice of rate will depend on the currency of the loan. But in
The Code itself does not say anything about this.
What other pitfalls are there for currency debtors?
One of the most obscure norms of the Code is paragraph 4 of part 7 of Art. 123. It contains one of the grounds for the court to close the insolvency case.
If a foreign currency mortgage debtor does not have the financial ability to pay debts under the conditions provided for by the Code, the court may close the insolvency case.
And then there will be no restructuring or bankruptcy. You can not initiate a case again until a year after its closure.
The court may close the case on its own initiative, after the request of the fees of the creditors or the party to the case.
There is an assumption that this is done to deal with unscrupulous borrowers. So that they do not have the opportunity to give a mortgage apartment and forget about the remaining debts.
But in general, the norm is controversial, and it is not completely clear how it will be applied in practice.
Can foreign currency borrowers get rid of bad debts under such conditions? It’s too early to draw conclusions.
But given that foreign currency debtors can take advantage of the restructuring within the first 5 years after the entry into force of the Code, an interesting practice awaits us soon.
Specialists of the Lawyer Association "Krikun and Partners" have extensive experience in practice in this field of law and are ready to offer you their assistance in resolving issues related to writing off debts, in order to leave a request, use the form on the website .
