At the end of June 2025, the National Assembly of the Republic of Bulgaria adopted the Law on Personal Bankruptcy. This new legislation establishes a judicial framework that enables bona fide citizens facing permanent insolvency to resolve their debts and make a fresh start. It balances creditor protection with opportunities for the debtor’s financial rehabilitation.
WHO IS ELIGIBLE TO INITIATE PROCEEDINGS UNDER THE LAW?
- An individual who is not a trader or entrepreneur.
- Demonstrated insolvency: at least one unpaid monetary obligation exceeding ten times the minimum wage, overdue by more than twelve months.
- Evidence of good faith, shown through behavior free of deliberate harm to creditors, concealed assets, or fictitious transactions.
OVERVIEW OF THE PROCEDURE
- Filing an Application – The debtor initiates the process by submitting detailed information and a sworn declaration.
- Verification – The court assesses the debtor’s good faith, appoints a receiver, and secures the debtor’s assets.
- Submission of Claims – Creditors must submit their claims within three months.
- Repayment Plan – May include rescheduling payments, deferral, or partial forgiveness of debts.
- Liquidation (if no plan is approved) – The debtor’s assets are sold and the proceeds are distributed among creditors.
- Final Repayment – Obligations are terminated by law once all conditions have been met.
RECEIVER AND PUBLIC REGISTRY
- The receiver plays a central role – overseeing transactions, documenting assets, collecting receivables, and proposing a repayment plan.
- All activities are logged in a public electronic registry, ensuring transparency and traceability.
KEY FEATURES AND BENEFITS
- Asset-Free Relief – If the debtor possesses no assets, outstanding debts may be discharged after a period of three years.
- Approved Repayment Plan – Upon approval, liabilities are restructured and enforcement actions are discontinued.
- Out-of-Court Settlement – A mutual agreement between the debtor and creditors may be reached at any stage of the process.
NON-DISCHARGEABLE OBLIGATIONS
- Fines – Monetary penalties imposed by a court or authority.
- Maintenance – Financial support obligations, such as child or spousal support.
- Unauthorized Damages – Compensation owed due to unlawful harm or liability.
- Secured Receivables – If collateral is not realized, these obligations remain valid.
- Post-Proceedings Debts – New financial obligations incurred after the proceedings begin.
The law has a clearly defined objective: to safeguard the interests of all stakeholders, offer a fresh start to bona fide debtors, and establish a stable framework for resolving personal bankruptcy cases.