Personal Bankruptcy: Why the Procedure Is Becoming Increasingly Relevant

In the first half of 2025, the number of court rulings on personal insolvency in Ukraine increased by one third. A total of 577 citizens were declared bankrupt. This reflects not only the deepening of financial problems in society but also the gradual formation of a new legal culture—when issues of personal insolvency are addressed in a civilized and lawful manner.

Why do people resort to bankruptcy?

Most often, the initiators are:

• entrepreneurs who lost their businesses or markets due to the war (around 40% of cases);
• migrant workers who returned home and cannot service foreign currency loans (25%);
• property owners with mortgage loans in foreign currency taken before 2014;
• guarantors and co-borrowers who remain solely responsible for debts after the main borrower defaults.

The majority of cases are concentrated in Kyiv and other major economic centers: Kyiv recorded 128 cases in six months, Kyiv region — 83, Lviv — 73. Interestingly, gender statistics are almost balanced: 52% of debtors are men, 48% are women.

What should one know before filing?

Personal bankruptcy is not a quick way to “write off” debts. It is a complex and lengthy process with serious consequences:

• loss of almost all valuable assets;
• credit restrictions for many years;
• reputational risks;
• public disclosure of the proceedings.

At the same time, the procedure gives a chance to legally terminate obligations, stop the accrual of penalties and fines, protect against collector pressure, and secure legal certainty under court supervision.

Before filing, it is advisable to exhaust all other options for resolving debts. The law requires clear grounds for opening a case. The most common are:

• for two months, more than 50% of payments on each credit obligation were not made;
• the debtor has no property available for enforcement, as confirmed by the bailiff;
• the existence of “signs of a threat of insolvency” (a new ground introduced in 2024).

One of the most common questions is: how can an insolvent person pay for the services of an insolvency practitioner? The fee usually ranges from UAH 20,000 to 50,000, but the law allows for agreements with deferred or partial payments. This reduces the financial entry barrier and makes bankruptcy accessible even for socially vulnerable citizens.

It is equally important to remember that the debtor must fully cooperate with the insolvency practitioner and provide accurate information about assets and liabilities. Any attempt to hide property may lead to the denial of debt discharge or even criminal liability.

Conclusions

In six years of the personal bankruptcy framework being in place in Ukraine, nearly 3,000 cases have been opened. This indicates that the mechanism is gradually becoming an established part of legal practice. Its growing use shows a shift away from a punitive approach to debtors toward a restorative one: instead of hopelessness, a person gains the chance to start over.

For the state, this is both a challenge and an opportunity. The effectiveness of the mechanism depends on balancing the interests of creditors and debtors, building trust in the judiciary, and developing related institutions such as the enforcement service and the system of free legal aid.

Personal bankruptcy is not an escape from responsibility but a legal tool which, if used correctly, provides a real chance for a fresh start.