The Head of State was signed the Law of the Republic of Kazakhstan ‘On the restoration of solvency and bankruptcy of citizens of the Republic of Kazakhstan’ on December 30, 2022 year. But after 60 days after its official publication, it will begin to act. It means that citizens will be able to send an application from March 3, 2023, that unable to repay for the debts.   

The bankruptcy law provides for 3 types of procedures. There are: out-of-court bankruptcy, judicial bankruptcy and restoration of solvency. The borrower only himself can initiate these procedures, that the creditor does not have the duty to file for bankruptcy of the debtor.

When does out-of-court bankruptcy apply?

If an individual of borrower’s debt, microfinance organizations, collection agencies does not exceed 1600 monthly calculation indices (in 2023 it’s 5 million 520 thousand tenge), then he can consider the out-of-court bankruptcy procedure. But the borrower must meet a certain condition:

• property must not be registered on it, including property in common ownership;
• on the date of filing the application must have no repayment of obligations to creditors, collectors within 12 consecutive months;
• procedures were carried out to settle or recover unfulfilled obligations under the loan agreement within a period in relation to the debtor, exceeding 18 months from the date of occurrence of the overdue debt;
• bankruptcy has not been applied by him at the date of filling the application for 7 years.

An individual borrower, having not repaid their debt, can also apply for out-of-court bankruptcy for more than 5 years at the date of application. The listed conditions do not apply to such a debtor, in this case:

Attention! A debtor, who has been a recipient of targeted social assistance (TSA) may apply for this procedure without regard to the delay for six months. The debtor is assigned the ‘bankrupt’ status after applying this procedure.

How to apply a statement?

The application can be submitted through the e-Gov website from March 3, 2023.

By the help of information system, which is at the moment being tested, an automatic verification will be carried out with the interested state data and other bodies for the compliance of the debtor with the necessary criteria.

A permanent list of allocations, indicating their name, amount of recovery, a location, a copy of the document, resulting from the debtor under a bank loan agreement and (or) a microcredit, are also attached to the application.

When does a judicial bankruptcy apply?

These procedure citizens can apply for debts over 1600 MCI (5 million 520 thousand tenge in 2023 year) and for all types of debts to creditors.

The debtor’s property is sold at auction in the course of judicial bankruptcy. It also has own nuances. The only condition if it is the subject of pledge, in the course of judicial bankruptcy, the creditor has the right to withdraw the only housing of the debtor.

There are no signs of write-off provided of bad faith of the debtor, subjected remaining outstanding amount. We are talking about concealing property or information about it, providing false information, etc.

The judicial bankruptcy procedure is carried out by financial managers, which will include:

• administrators carrying out the bankruptcy procedure of legal entities and individual entrepreneurs;
• professional accountants;
• legal consultants;
• auditors.

Financial manager services are paid. Service payment is made at the expense of the debtor’s property (in 2023, 1 minimum wage per month is thousand tenge). Individuals are free for financial manager services, which is belonging to socially vulnerable segments of the population, who do not have a property.

Attention! Proceeding the application, the debtor is prohibited from:

• make transactions for the alienation of property or the assumption of new obligations (obtaining loans, issuing guarantees, and guarantees);
• travel abroad.

How to apply a statement?

The application is accepted from March 3, 2023 to the court at the place of residence of the debtor. The duration of bankruptcy is 6 months and the possibility of extension for another six months.

Application attached:

• a list of all creditors and debtors, indicating the amount of debt and the date of their formation, addresses and place location, e-mail addresses and contact phone numbers (if such information is available) for their subsequent notification;
• an inventory of the debtor’s property with a report on its valuation (if any) drawn up no later than 6 months before filing for bankruptcy;
• a list of civil law and (or) other obligations, including those under an obligation, the claims of which are secured by a pledge of the debtor’s property, for the last 3 years prior to filing an application for the application of the judicial bankruptcy procedure;
• a copy of a document confirming that the debtor has taken a measures to settle the debt under a bank loan agreement and (or) a microcredit agreement.

When is the procedure for restoring solvency applied?

Citizens with a constant income can apply to this procedure, which provides for the possibility of obtaining in court an installment plan for paying debts up to 5 years. The amount of debt should not exceed the value of the property owned by the borrower – is the only condition for a debtor, who plans to apply for the restoration of solvency. 

The recovery plan is developed jointly with the financial manager and approved by the court. Activities are including:

• sale part of the property;
• transfer of property for rent;
• sale of housing with the purchase of a new one;
• exchange for housing with a lower cost and more.

Attention! The main advantage of procedure is after it the debtor is not assigned the status of ‘bankrupt’. The consequences are provided for a bankrupt do not apply to him, and also there are no restrictions in the form of a ban on going abroad.

How to apply a statement?

An application can be submitted from March 3, 2023 to the court at the place of residence of the debtor.

Application attached:

• a list of all creditors and debtors with the required information;
• a list of civil law and (or) other obligations, including under an obligation, the claims of which are secured by a pledge of the debtor’s property, for the last three years prior to the filing of an application for the application of the procedure for restoring solvency;

a copy of debtors document confirming that he has taken a measures to settle the overdue debt.