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Bankruptcy. Evasion of obligations' execution

Bankruptcy. Evasion of obligations' execution

Courts impose special requirements on the good faith of the debtor when deciding on the cancellation of debts in the framework of bankruptcy. Good faith behavior implies open interaction with the court, cooperation with creditors and with the bankruptcy trustee.

There are circumstances, in which the court finds the debtor's conduct unfair. In this case, the court has the right to decide on the non-cancellation of the debt. One of these circumstances is the debtor's malicious evasion of obligations..

Supreme Court Decision No. 310-ES20-6956 articulated the position., according to which malicious evasion of obligations constitutes a persistent unwillingness of the debtor to perform debt obligations when such an opportunity exists. Usually, for a long time, the debtor acts to achieve an unlawful purpose.

Signs of malicious evasion of obligations are the following:

  • Luxurious lifestyle of the debtor in case of non-fulfillment of the creditor's claims to repay debts.
  • Obstruction of the actions of the bankruptcy trustee in the formation of the bankruptcy estate.
  • Intentional commission of dubious transactions with the aim of causing harm to the property interests of the creditor.
  • Providing false information about income, property to prevent foreclosure.
  • Name change, place of residence without notifying the financial manager.

If signs of malicious evasion of obligations are detected, the court has the right not to write off the debtor's debts.

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