On April 7, Ukraine’s Parliament, the Verkhovna Rada, enacted a significant law aimed at enhancing restrictions on debtors and transitioning debt collection into an automated system. This legislation is part of broader reforms intended to streamline the enforcement of financial obligations.
The newly adopted law introduces changes to the executive proceedings framework, emphasizing digitalization. It aims to improve interactions between enforcement officers and various state institutions, banks, financial organizations, and non-bank payment services.
One of the key provisions of the law is the tightening of restrictions on debtors’ property management. Individuals listed in the Unified Register of Debtors will face prohibitions on selling or pledging their assets, as notaries and other authorities will deny such transactions.
However, the law also simplifies the process for lifting these restrictions once debts are settled. Upon receipt of payment by the enforcement agency or a private executor, the system will automatically generate a notification confirming the debt’s clearance. This notification will serve as the basis for removing the debtor from the register and lifting any freezes on their funds, electronic money, or securities.
The passage of this law aligns with Ukraine’s commitments under the Ukraine Facility program, which aims to enhance the country’s economic stability.
Member of Parliament Ihor Fris highlighted that the legislation includes specific protections for military personnel. It prohibits the seizure of their sole housing during martial law and for one year following its conclusion. Additionally, it restricts the seizure of a debtor’s only residence if the debt does not exceed 50 minimum wages, approximately 432,000 UAH.
Fris noted, “The law does not introduce any new provisions that would allow for the confiscation of a debtor’s sole property. In fact, the threshold has been increased from 20 to 50 minimum wages for which housing can be seized by court order.”
Other Debt-Related Developments in Ukraine
In a related legislative effort, the Verkhovna Rada has also approved a law that exempts owners of damaged property from paying utility bills, protecting them from unjust debts. The new regulations state that billing will cease from the date of destruction for completely destroyed properties, while properties deemed uninhabitable will not incur charges during the repair or restoration period.
Additionally, discussions are ongoing regarding penalties for unpaid alimony in Ukraine, with potential sanctions for significant arrears.
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Ukraine's Parliament has enacted a law that automates debt collection and strengthens restrictions on debtors' property rights. This legislation aims to streamline enforcement processes while providing specific protections for vulnerable groups, including military personnel.