Personal bankruptcy: why a court may refuse despite million-hryvnia debts
Large debts alone do not entitle a person to the insolvency procedure. The court checks how the debts arose and how the debtor acted before applying.
What the practice shows
The number of insolvency applications by individuals is growing: in nine months of 2026 courts opened 1,293 proceedings, 37% more than a year earlier. But opening proceedings is not a “debt write-off button”. In case No. 917/2334/25 the Commercial Cassation Court (ruling of 16 June 2026) upheld a refusal to a debtor with overdue debts above UAH 1.35 million.
The circumstances: more than 40 loan agreements in a short time, part of the money spent on gambling, new loans taken even after servicing of the debts had stopped, and restructuring programmes offered by creditors left unused. The court held that large debts and the inability to pay them are not in themselves a sufficient ground: the reasons for the debts, the debtor's conduct and the existence of the grounds set out in Article 115 of the Bankruptcy Code must be checked.
Why good faith is the central question
In my view, the insolvency procedure is meant for people who have fallen into hardship through objective circumstances and cannot perform their obligations despite their own efforts. So the court looks not only at the numbers but also at the history: how the debts arose, whether the debtor tried to agree with creditors, what he did right before applying.
A request for self-exclusion from gambling filed before going to court did not rebut the established circumstances. Gambling as such is not prohibited, but it is taken into account when assessing good faith.
What to do in practice
- Collect documents on why the debts arose: loss of income, illness, closure of a business, wartime circumstances.
- Do not take new loans to close old ones. The court assesses such conduct together with the whole picture.
- Try to agree with creditors. Refusing an offered restructuring may be held against you.
- Do not rely on formal steps taken “at the last minute”. The court sees the chronology.
- Assess alternatives: restructuring, a settlement, partial repayment — before going to court.