The legal position of natural persons in economic circulation has significant features compared to subjects endowed with the status of a legal entity. Acting as consumers, individuals may be burdened with a significant amount of debt, and if so, they have to bear the risks of default in the event of their insolvency.

The Institute of Insolvency of Individuals is a very effective way of protecting bona fide debtors who find themselves in a difficult financial situation for objective reasons. The application of the norms of this institution in practice enables debtors to restore their solvency, to pay off creditors’ claims in an organized manner, and to be freed from debts.

The purpose of the article is: formulation and analysis of the content of the main principles on which the institution of insolvency of natural persons in Ukraine is based, substantiation of their content based on the provisions of the domestic legislation on bankruptcy, as well as presenting own vision regarding the directions for improving the legislation in the specified aspect, which will contribute to overcoming the existing problems and improving the effectiveness of the implementation of its norms in practice.

The authors come to the conclusion that the basis of the regulation of insolvency relations of individuals who do not have the status of subjects of entrepreneurial activity, which was introduced by the Code of Ukraine on Bankruptcy Procedures (hereinafter the Bankruptcy Code), is a system of principles immanent to this institute, which, unfortunately, did not find the reflection in the current legislation.

It was established that the analysis of Book 4 of the Bankruptcy Code allows us to identify five principles that maximally clarify the essence of the institution of individuals’ insolvency. These are the principles of: economy; payment inability; the priority of the debt restructuring procedure; exclusivity of the debt repayment procedure; bona fide.

The essence of the principle of economy is that the insolvency procedure of an individual should be carried out with the minimum necessary costs.

 Since the initiator of the insolvency cases is exclusively the debtor, therefore, the prerequisite of the given cases should be the debtor’s payment inability. And thereby, the conditions for opening these cases should be directly related to the term “payment inability”, as the inability to fulfill the creditor’s claims due to the insufficient assets of the debtor.

The priority of the restructuring procedure means that it is introduced immediately with the opening of the insolvency case. The result of the restructuring procedure is the repayment (payment, settlement) of all debts of the debtor – natural person.

The debt repayment stage has the subsidiary nature, as it is introduced as a summary of the unsatisfactory results of the preparatory or planning part of the restructuring.

The principle of bona fide is that the participants in an insolvency case, exercising their rights, should not take actions aimed at violating (oppression) of material rights or causing harm to other participants.

Bibliography

Authored books

1. Butyrskyi A, Zakhody shchodo vidnovlennia platospromozhnosti borzhnyka yak shliakh podolannia bankrutstva (Knyhy–XXI 2008) (in Ukrainian).

2. Dzhun V, Instytut nespromozhnosti: svitovyi dosvid rozvytku i osoblyvosti stanovlennia v Ukraini (Iurydycheskaia praktyka 2006) (in Ukrainian).

3. Poliakov B, Pravo nespromozhnosti (bankrutstva) v Ukraini: pidruchnyk dlia studentiv vyshchykh navchalnykh zakladiv (In Yure 2011) (in Ukrainian).

4. Pryhuza P, Problemy teorii i praktyky konkursnoho prava v Ukraini: nespromozhnist ta bankrutstvo (Kharkiv yurydychnyi 2009) (in Ukrainian).

5. Rabinovych P, Osnovy zahalnoi teorii prava ta derzhavy: navchalnyi posibnyk (vyd 9-e, zi zminamy, Krai 2007) (in Ukrainian).

 Journal articles

6. Radzyviliuk V, ‘Metod, pryntsypy ta funktsii prava bankrutstva (nespromozhnosti)’ (2010) 82 Visnyk Kyivskoho natsionalnoho universytetu imeni Tarasa Shevchenka. Yurydychni nauky 23–5 (in Ukrainian).

7. Koziubra M, ‘Pryntsypy prava: metodolohichni pidkhody do rozuminnia pryrody ta klasyfikatsii v umovakh suchasnykh hlobalizatsiinykh transformatsii’ (2017) 11 Pravo Ukrainy 142–64 (in Ukrainian).