Bankruptcy of an Individual

Bankruptcy of an individual is a legal court procedure for resolving the debts of a person who has lost the ability to fulfil their monetary obligations to creditors. Under Ukrainian law, this procedure is referred to as insolvency proceedings of an individual.

It is not a way to simply stop paying debts or automatically write off all obligations. It is a comprehensive procedure in which the commercial court, insolvency practitioner, debtor, and creditors examine the debtor’s financial situation, verify creditors’ claims, develop a debt restructuring plan, or proceed to debt repayment through the sale of assets.

VINCO’S Legal Company assists individuals and individual entrepreneurs in assessing the prospects of bankruptcy, preparing documents, developing a legal strategy, supporting the court procedure, and minimizing risks for the client.

Insolvency proceedings should be considered when debts can no longer be serviced in the ordinary course, negotiations with creditors have failed, and enforcement proceedings, account freezes, or continuing penalties effectively block the debtor’s normal life and work.

• the person has stopped paying loans or other scheduled payments in a significant amount for several months;
• enforcement proceedings, account freezes, or asset seizures exist;
• the debtor’s assets are insufficient to repay all debts;
• creditors refuse voluntary restructuring;
• debts continue to grow due to penalties, default interest, and charges;
• there is a real threat of insolvency;
• the person wants to resolve debts legally and obtain an opportunity for financial recovery.

Insolvency proceedings of an individual may be opened only upon the application of the debtor. A creditor cannot independently initiate bankruptcy of an individual, even if the debt has been confirmed by a court judgment or enforcement document.

The application is filed with the commercial court at the debtor’s place of residence. Together with the application, the debtor must submit a substantial package of documents, asset declarations, and proposals for debt restructuring.

Two main court procedures may apply to an individual:

• debt restructuring of the debtor;
• debt repayment procedure.

Debt restructuring is generally the preferred scenario because it allows a realistic repayment plan to be agreed with creditors. Such a plan may include deferral, instalment payments, changes in the repayment procedure, sale of certain assets, partial debt write-off, or other lawful mechanisms for restoring solvency.

If the restructuring plan is not approved or is not performed, the court may declare the debtor bankrupt and open the debt repayment procedure. In that case, the debtor’s assets are sold, and the proceeds are used to satisfy creditors’ claims according to the statutory priority.

Opening insolvency proceedings has important legal consequences for the debtor and creditors.

• creditors’ claims may be submitted only within the insolvency case;
• a moratorium on satisfaction of creditors’ claims is introduced;
• enforcement under most enforcement documents is suspended;
• penalties, default interest, and other financial sanctions stop accruing;
• interest on the debtor’s obligations stops accruing;
• disposal of the debtor’s assets is subject to the restrictions of the Bankruptcy Procedures Code of Ukraine;
• the insolvency practitioner reviews the debtor’s assets, creditors’ claims, and participates in preparing the restructuring plan.

At the same time, the procedure requires full good faith from the debtor. Concealing assets, providing false information, entering into sham transactions, or attempting to transfer assets out of reach may result in negative consequences and refusal to discharge debts.

The procedure may cover bank loans, loan agreements, debts to banks, financial companies, microfinance institutions, service providers, tax debts, and other monetary obligations that may be included in insolvency proceedings.

However, not all obligations may be discharged. After completion of the procedure, an individual is not released from, in particular, child support obligations, compensation for harm caused by injury, other damage to health or death of an individual, and other claims that are inseparably linked to the debtor’s personality.

Document preparation is one of the most complex stages of the procedure. The application usually requires information on creditors, assets, income, accounts, family status, previous transactions, and asset declarations.

• passport details and taxpayer registration number of the debtor;
• information on the place of residence;
• list of creditors with debt amounts and grounds for obligations;
• loan agreements, credit agreements, court judgments, and enforcement documents;
• information on the debtor’s income;
• information on bank accounts and electronic wallets;
• list of movable and immovable property;
• information on pledged or mortgaged property;
• documents on transactions with valuable assets during the relevant previous period;
• asset declarations in the prescribed form;
• draft debt restructuring plan;
• evidence of advance payment of the insolvency practitioner’s remuneration for three months.

One of the mandatory costs is the advance payment of the insolvency practitioner’s remuneration for three months of acting as the debt restructuring manager.

In 2026, the subsistence minimum for able-bodied persons is UAH 3,328. The remuneration of the debt restructuring manager is five subsistence minimums per month, which equals UAH 16,640 per month. Accordingly, the estimated advance payment for three months in 2026 is UAH 49,920.

Additional expenses may include obtaining documents, property valuation, postal expenses, notarial actions, legal support, and other steps required for proper conduct of the case.

1.   Initial consultation and analysis of the debt situation.
2.   Verification of legal grounds for applying to court.
3.   Collection of information on creditors, assets, income, accounts, and transactions of the debtor.
4.   Preparation of asset declarations.
5.   Development of a draft debt restructuring plan.
6.   Preparation of the application to the commercial court.
7.   Filing the application and supporting the opening of proceedings.
8.   Interaction with the insolvency practitioner and creditors.
9.   Support during the debt restructuring procedure.
10.   If necessary, support during the debt repayment procedure.
11.   Completion of the procedure and obtaining a court decision on discharge of debts within the limits permitted by law.

• for five years after being declared bankrupt, the person cannot initiate another insolvency case, unless all debts have been repaid in full;
• for five years, the person must notify counterparties of the fact of insolvency before entering into loan, credit, suretyship, or pledge agreements;
• for three years, the person is not considered to have impeccable business reputation;
• the court may temporarily restrict leaving Ukraine if the debtor obstructs the procedure;
• bad-faith conduct may lead to closure of the case or refusal to discharge debts;
• certain personal obligations are not discharged even after completion of the procedure.

VINCO’S Legal Company provides comprehensive legal support for insolvency cases of individuals and individual entrepreneurs.

• assessing whether bankruptcy is appropriate in a specific situation;
• reviewing debts, enforcement proceedings, creditors, and the client’s assets;
• helping prepare the full package of documents;
• developing a draft debt restructuring plan;
• preparing the application to the commercial court;
• supporting the client throughout the court procedure;
• communicating with the insolvency practitioner and creditors;
• minimizing risks of refusal, closure of proceedings, or negative consequences;
• supporting the procedure until completion and achievement of the result.

If debts have become unmanageable and negotiations with creditors are no longer effective, the VINCO’S team will help assess the prospects of individual bankruptcy and choose a safe legal strategy.