Personal bankruptcy has existed in Russia since October 2015. In that time, a substantial body of case law has developed — and the Supreme Court of the Russian Federation (SC RF) has been its primary architect. The Court’s positions set the standard for how arbitration courts across the country decide disputes over debt discharge, luxury housing, transaction challenges, and debtor good faith.
Plenum Resolution No. 48 of 25 December 2018
This is the foundational document. The Plenum instructed courts on how to apply Federal Law No. 127-FZ to personal bankruptcy cases. The key positions:
The goal is rehabilitation, not punishment. The SC RF emphasized that bankruptcy is an instrument of economic rehabilitation for a citizen in genuine difficulty. Refusing to discharge debts should be a reasoned exception, not a default outcome.
Good faith is the central condition for discharge. A court may refuse to release a debtor from obligations only if it establishes dishonest or unlawful conduct. The mere existence of debts, their size, or the absence of assets is not grounds for refusal.
Replacement of luxury housing. The Plenum recognized that a sole dwelling may be replaced with a smaller one if it clearly exceeds the family’s reasonable needs. However, replacement is only permitted when alternative housing is provided to the debtor simultaneously — a debtor cannot be left without a roof over their head.
What the SC RF Treats as Bad-Faith Conduct
Courts refuse debt discharge when the following circumstances are established.
Concealing assets or income. The debtor failed to disclose information about property, accounts, or income to the financial trustee, or provided knowingly false information to the court. This is the most common ground for refusing discharge — courts consistently deny relief to debtors who hide assets.
Taking on credit with no intention to repay. If a debtor took out loans while knowing they were insolvent, this signals bad faith. The SC RF has made clear that courts assess not only conduct after the petition is filed, but also behavior at the time the loans were taken out.
Fictitious bankruptcy. Filing a bankruptcy petition while holding concealed assets, or doing so to evade a specific creditor.
Failure to cooperate with the trustee. The debtor ignored the trustee’s requests, did not appear at hearings, or refused to hand over documents.
The Court’s Position on Challenging Transactions
The SC RF has established a clear rule: the financial trustee must review transactions the debtor made in the 3 years before the petition was filed. Transactions at risk include:
- transactions at below-market value — selling property for less than its market price (Article 61.2 of Law No. 127-FZ);
- transactions that harmed creditors — gifting property, transferring assets to relatives;
- preferential satisfaction — paying off one creditor at the expense of others within a month before the bankruptcy filing.
A key clarification: proving intent is not required for a transaction to be declared void. It is enough to show that the debtor knew or should have known that the transaction would harm creditors.
The Subsistence Minimum: The SC RF’s Position
Russia’s Constitutional Court, in its 2021 ruling, established that a financial trustee is required to pay the debtor the subsistence minimum each month from any income received during the procedure. Withholding everything is not permitted.
In 2022, amendments to the law codified this requirement explicitly. The SC RF has also clarified that the subsistence minimum for each dependant — children or incapacitated family members — is paid on top of the debtor’s own minimum.
Sole Housing: Current Practice
Following Constitutional Court Resolution No. 15-П (2021), courts may apply enforcement to a sole dwelling that clearly exceeds the debtor’s reasonable needs. The SC RF has refined the criteria:
- floor area — significantly exceeds the living space norms for the debtor’s household;
- market value — sufficient to purchase smaller housing and substantially repay debts;
- simultaneous provision — replacement is only permissible if alternative housing is provided to the debtor at the same time.
In practice, replacing a debtor’s sole home is an exceptional measure applied in a small number of cases involving high-value property.
Key SC RF Rulings in Recent Years
Ruling No. 310-ЭС17-14013 of 25 January 2018. The debtor concealed that he served as director of two companies and submitted false tax declarations to the court. The SC RF refused to discharge his debts: the right to debt relief exists only for honest debtors who fully disclose all information about their assets and income.
Ruling No. 306-ЭС20-20820 of 19 April 2021. Immediately after a court ordered the debtor to repay a debt, the debtor sold a car at below-market value and gifted a land plot to his wife. The SC RF found this conduct dishonest and refused to release him from his obligations.
Ruling No. 307-ЭС22-27054 of 26 June 2023. The debtor lost their only home when it was sold as pledged property. The SC RF held that any surplus remaining after the secured creditor is paid must be passed to the debtor — to be used for new housing or rent — rather than distributed to other creditors. This is an exception to the general distribution rules of Art. 213.27 of Insolvency Law No. 127-FZ and applies only when the pledged property was the debtor’s sole dwelling.
Practical Takeaways for Debtors
The SC RF’s positions point to several rules that matter in any bankruptcy case:
- Disclose everything. Every asset, every account, every source of income — the trustee will check. Concealment equals refusal of discharge.
- Cooperate with the trustee. Respond to requests, provide documents, appear at hearings.
- Do not transfer assets. Transactions from the three years before filing will be reviewed. Gifting an apartment to a relative six months before filing is a reliable way to lose the protection bankruptcy offers.
- Good faith is not a formality. Courts assess overall conduct: how you borrowed, how you spent, how you dealt with creditors.
Frequently Asked Questions
What if I was unaware of some asset I owned? A court may accept that explanation — if it is plausible. But if the trustee proves you knew and concealed it, that is bad faith.
Can debts go undischarged even if I did everything right? In theory, yes — if specific grounds exist, such as fraud or non-dischargeable categories of debt. But when a debtor acted honestly, the SC RF consistently supports their right to relief.
Does the SC RF’s position bind lower courts? There is no strict hierarchy, but Plenum resolutions and rulings on specific cases create benchmarks that lower arbitration courts follow in practice.
Where can I find current SC RF rulings on bankruptcy? At vsrf.ru under “Judicial Practice,” and in the case registry at kad.arbitr.ru — searchable by case number.
For the full picture on what bankruptcy means for your future, and a step-by-step look at how the procedure works. If you have a specific situation to assess — submit a request.