Bulgaria now has a Personal Insolvency Law, but its actual implementation is expected no earlier than March 2026. This procedure can be utilized by an individual only once in a lifetime.
Who Can Apply for Personal Insolvency?
To be declared insolvent, the debtor must have been illiquid (insolvent) for more than 12 months and have matured monetary obligations with a total value exceeding 10 minimum monthly wages (i.e., over BGN 10,770, based on the current minimum wage).
Conditions for Good Faith
The procedure can only be initiated by a good-faith debtor who has undertaken obligations according to their capabilities and has not harmed their creditors. A debtor is considered to be in bad faith in 11 specific cases, including:
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Conviction for crimes.
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Lack of employment without a valid reason.
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Providing false information about property.
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Intentional obstruction of the process.
Consequences and Discharge of Debts
Upon the opening of the proceedings, the debtor loses the right to manage and dispose of their property without the permission of an appointed trustee (syndic). The trustee manages the property, collects receivables, and proposes a repayment plan.
The goal is for the debtor to be discharged from their obligations through the execution of a repayment plan or the liquidation (monetization) of their property. Even in the absence of property, if the debtor is in good faith, their obligations to the included creditors are discharged after three years from the insolvency decision.
It is important to know that some obligations are not discharged, including:
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Those secured by a mortgage or pledge.
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Fines.
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Obligations for non-pecuniary damage (tort).
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Obligations for maintenance (alimony) by law.
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Obligations incurred after the opening of the proceedings.
Guarantors and jointly and severally liable persons are also not discharged from their obligations.
This law is an important step for Bulgaria towards synchronizing with European practices and providing a mechanism for the financial recovery of citizens.
