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Bankruptcy in Kazakhstan allows debts to be written off, but maintenance payments and certain other obligations must still be paid. Your only home can be sold if it is pledged as collateral, for example under a mortgage, although this is a complex and lengthy process. Bankruptcy also brings borrowing restrictions, and your financial situation is monitored for a further three years. Here are the conditions and consequences, based on reporting by inbusiness.kz.
Who can have debts written off without going to court
Out-of-court bankruptcy is available for debts owed to banks, microfinance organisations (MFOs) and debt collectors. It does not cover debts owed to pawnshops.
The basic requirements are debts of up to 1600 monthly calculation indices (MCI), no assets and no payments for at least a year.
Debts above the permitted limit, an insufficient period of overdue payments or ownership of assets can lead to rejection. Before applying, check how much you owe, your payment dates and any records of property or vehicle ownership.
What happens to your home and other assets
Court bankruptcy is available to debtors who do not qualify for the out-of-court procedure. Assets that can legally be seized are sold at auction. The proceeds go to creditors, and the remaining debt may be written off.
Your only home is protected if it is not pledged as collateral. A mortgaged flat can be sold even if the debtor has no other home, although this is a complex and lengthy process.
Asset transactions are also checked before bankruptcy. If a debtor tried to hide assets or transfer them to relatives, the transaction may be challenged. This also puts buyers of those assets at risk.
Which debts remain after bankruptcy
The law preserves obligations that cannot be written off. These include:
- maintenance payments;
- compensation for harm to life or health;
- compensation for damage caused by criminal offences;
- court-ordered payments to the state budget;
- unpaid fees owed to the financial administrator.
Completing the procedure therefore does not mean all payments will stop. These obligations need to be factored into future expenses.
How long borrowing and travel restrictions last
For five years after completing out-of-court bankruptcy, you cannot take out bank loans or microloans, except loans from pawnshops. You also cannot pledge collateral or act as a guarantor or surety.
You can apply for bankruptcy again after seven years. The end of the five-year borrowing restriction does not guarantee approval for a new loan: lenders will still take the previous bankruptcy into account.
During court bankruptcy proceedings, a temporary ban on leaving the country may apply. This restriction does not apply to out-of-court bankruptcy.
What will be checked after debts are written off
Your financial situation is monitored for three years. If someone who has been declared bankrupt acquires assets that require state registration, the information will be passed to creditors. This also applies to assets acquired jointly with a spouse.
Creditors can ask a court to revoke the bankruptcy declaration. If the lawful acquisition of the assets cannot be verified, the court may overturn the decision and reopen the proceedings.
How to repay debts without being declared bankrupt
The solvency restoration procedure allows repayments to creditors to be spread over several years. Under this procedure, a person is not declared bankrupt.
Put simply, before applying, check the types of debt you have, any collateral and your assets. If you plan to file for bankruptcy, factor in the payments that will remain and the restrictions on new borrowing.
