Individuals are now entitled to file for their own bankruptcy to obtain debt relief under a simplified procedure without applying to a court. At the same time, in certain cases creditors may demand the bankruptcy to be referred to court to protect their interests.

The law enabling out-of-court bankruptcy of individuals entered into force on 1 September 2020 (see the Federal Law dated 31.07.2020 No. 289-ФЗ). It establishes a simplified procedure for bankruptcy that can be initiated by an individual, provided that her or his debt is no less than fifty thousand rubles and no more than five hundred thousand rubles. In addition, an application for an out-of-court bankruptcy may be submitted only if the debtor shows that all enforcement writs against him or her had been returned to creditors and no new enforcement proceedings were initiated.

A person who wishes to declare herself or himself bankrupt has to apply to a multifunctional center for provision of public and municipal services (MfSC) at the place of permanent or temporary residence and present a list of all creditors known to him or her. The MfSC is obliged to publish information on the out-of-court bankruptcy in the Unified Federal Register of Bankruptcy Information. The bankruptcy proceedings take six months, during which the person has no right to conclude loan agreements, credit agreements, suretyship agreements and other security transactions.

After the end of the out-of-court bankruptcy procedure, the person is relieved of all debts indicated in the out-of-court bankruptcy application. Under certain conditions, the law also entitles the creditors to stop the simplified out-of-court procedure and refer the bankruptcy case to state court.