Many debtors successfully extinguish loans, microloans, debit card debts, consumer loans, and other financial obligations through the bankruptcy procedure available to individuals. Yet this route is not suitable for every situation or every person. Insights from a senior attorney at TrustFinance, who helps clients repair credit histories, explain that bankruptcy has strict eligibility rules and can carry lasting consequences that people should consider carefully before proceeding. This perspective is shared by a leading practitioner in the field who emphasizes practical limits and real-world outcomes of the process.
For instance, bankruptcy may be off the table if a citizen’s official income is relatively high or if the person owns real estate, vehicles, or other substantial assets they are not prepared to lose. Some individuals might be pursuing a career path or travel schedule that would be incompatible with bankruptcy status. Others may plan to apply for new credit soon or wish to preserve their reputation in the eyes of employers, landlords, and lenders. There are specific groups who will be denied bankruptcy, including people with a valid economic record of wrongdoing, those who have engaged in fraudulent schemes to obtain loans or enrich themselves, or individuals who have already undergone bankruptcy or debt restructuring within the last five years, according to the counsel at TrustFinance.
Though there are few alternatives to bankruptcy in Russia, some options do exist. The first option is to refinance existing obligations or to repay the debt in full. However, when debts are old, they are often sold to collection agencies, and sometimes transferred from one collector to another. This can raise the total financial liability and complicate the path out of debt, making it feel like the problem grows rather than shrinks over time, a point highlighted by the same legal expert.
The second and more common option is to acquire the debt at a substantial discount, either directly or through a third party or legal entity. The process typically unfolds as follows: a debtor has outstanding obligations that have been handed to collectors (generally debts older than one year), and a collection company—often a banking organization—buys the right to demand payment, but not for the full amount. For example, a debt of 100,000 rubles might be purchased as part of a larger package for several million rubles in total, while the company may acquire a single debt for as little as 3,000 to 5,000 rubles. The debtor then negotiates with this organization to reach a settlement. In practice, this resembles a pretrial settlement: the debtor approaches the bank or financial institution to which the debt is owed and negotiates a discount. In many cases, discounts of around 50 percent on debts older than one year are achievable, though it is important to account for the fact that collectors borrow at relatively low costs and will seek their own return, which can influence the ultimate outcome and timeline of the settlement process, the attorney notes.
Negotiations can be conducted independently or with the assistance of intermediaries such as trusted friends, relatives, or a legitimate third party. Debt resolution often takes from several weeks to a few months, depending on the complexity of the case and the responsiveness of the parties involved. Most importantly, the process is transparent and open, and in many respects mirrors the clarity associated with bankruptcy, offering a clear record of what has been settled. The expert adds that when all debts are paid, they are reported as fully satisfied on the debtor’s credit history, which can restore access to credit products in the future—an outcome that can be pivotal for rebuilding financial credibility after years of strain.
It is worth noting that the dynamics described align with the broader patterns of debt resolution in Russia and reflect the evolving landscape of consumer finance where creditors and debtors sometimes reach mutually beneficial settlements rather than pursuing formal insolvency routes. The conversation with the legal professional from TrustFinance highlights how practical considerations, prior financial behavior, and future plans all shape the best course of action for individuals facing significant debt burdens. In the end, a thoughtful approach to debt resolution—whether through negotiated settlements or other mechanisms—can open doors to recovery and financial stability, even for those who once felt trapped by a mounting balance sheet and an unyielding credit history, as reported by TrustFinance.