Russian retirees have a path to reduce or cancel their debts through bankruptcy procedures. A lawyer named Alexander Shefer discussed this option with Rossiyskaya Gazeta, outlining how in certain cases, debtors can avoid court proceedings by turning to an off-court process administered through the Multifunctional Center for the Provision of State and Municipal Services, commonly known as the MFC.
The main condition for this out-of-court debt discharge is a total debt range. If an individual owes between twenty-five thousand and one million rubles, they may qualify to have their obligations wiped out through the MFC. The critical requirement is that the person’s primary income comes from a pension or other social benefits. Additionally, the debtor must not own property that can be seized to satisfy the debt. Finally, the process looks at whether the debtor has failed to meet obligations for more than seven years and whether there are no active court proceedings against the person at the time of applying to the MFC.
For those who do not meet these criteria, the attorney noted that court-based bankruptcy remains an option. This route generally involves higher costs, including the procurement of documents, service fees, sending notices and legal fees. While it can be more complex, court bankruptcy may offer a more definitive resolution for debts that cannot be resolved through the out-of-court process.
Public statistics reported that between January and June 2024, a total of 4,363 legal entities were declared bankrupt in Russia. This figure marked a 40 percent increase compared to the same period in the previous year, illustrating a growing trend in corporate insolvencies during that timeframe.
In related news, Güven Bank filed for bankruptcy concerning the former head of Otkritie, an event that drew attention to ongoing restructurings and financial reforms within the banking sector during the period in question.