Personal Insolvency in Bulgaria – Who Can Apply and on What Conditions

Last updated: 4 August 2026

The Insolvency of Natural Persons Act (State Gazette No. 54 of 4 July 2025) introduced in Bulgaria for the first time a procedure known in practice as “personal insolvency”. It allows an over-indebted individual to ask the court for a single collective procedure in which their debts to all creditors are dealt with and, where certain conditions are met, partly or fully discharged. Before the Act was adopted, such a possibility existed only for traders under the Commerce Act, and ordinary citizens had no legal route out of persistent over-indebtedness.

Below we explain whom the Act applies to, when you are “insolvent” within its meaning, what amounts to “bad faith” on the part of the debtor, what documents are required and which debts are never discharged. At the end, we answer the most practical question, how an application is actually filed now that the register is operational.

To Whom the Act Does Not Apply

The Act governs personal insolvency only for citizens who have fallen into debt as private individuals, not as entrepreneurs. It expressly does not apply where the debts arise from business activity, and therefore does not apply to

• sole traders, where the debts relate to their commercial activity;
• entrepreneurs carrying on business activity by way of trade;
• craftspeople and members of the liberal professions (lawyers, notaries, architects, private bailiffs and others), for debts linked to their practice.

For these categories, insolvency remains governed separately by the Commerce Act. If you are an individual but meet the conditions under both Acts, the Commerce Act applies.

When Are You “Insolvent” Within the Meaning of the Act?

To trigger the procedure, you must meet two conditions cumulatively.

• Duration – for more than 12 months you have been unable to pay, in whole or in part, one or more monetary obligations that have fallen due.
• Minimum amount of debt – the total amount of your debts exceeds 10 national minimum monthly wages. With a minimum wage for 2026 of BGN 1,213 (EUR 620.20), the threshold is around BGN 12,130 (approximately EUR 6,202). This figure rises every year with the minimum wage, so the threshold should be checked afresh in each case rather than treated as fixed.

Who Is Considered a Debtor in “Bad Faith”?

The Act is designed to protect people who have fallen into hardship for reasons beyond their control, such as illness, redundancy or economic crisis, and not to serve as a way of escaping responsibility. The court therefore refuses to open proceedings if the debtor

• financial offences – has been convicted of breach of trust or of an offence against creditors or the financial, tax or social security system (unless rehabilitated);
• refusal to work – is able to work but, without good reason, has not worked or earned income in the last year before filing the application;
• concealed income in the past – has breached the obligation to declare income or assets in the last three years;
• gifts of assets – has disposed of assets of significant value free of charge in the last three years (including granting a mortgage or pledge for another person's debt);
• unreasonable and luxury borrowing – has, in the last three years, taken out a loan or bought goods or services on credit unrelated to the basic needs of their family and clearly disproportionate to their income;
• disadvantageous transactions – has disposed of assets on terms under which what was given considerably exceeded what was received in return;
• false statements to the authorities – has provided the court or the trustee with false, incomplete or untrue information about their assets and income, or has failed to declare newly acquired assets;
• obstruction of the procedure – has deliberately obstructed the inspection, inventory or safeguarding of their assets by the court or the trustee;
• breach of plans – has failed to perform an approved repayment plan or out-of-court settlement without objective reason;
• change of address – has changed address during the proceedings without notifying the court or the trustee within seven days;
• transactions with relatives and associates – has, in the last two years, disposed of assets of significant value in favour of a related person (a relative or business partner) with the aim of prejudicing creditors.

Key definitions under the Act – assets “of significant value” are assets whose value at the time of the transaction exceeds the debtor's average monthly income for the last 12 months. An “obligation clearly disproportionate” to income is a debt whose servicing makes it impossible to meet the basic living needs (food, shelter, health) of the debtor and their family.

What Documents Are Needed to File the Application?

The application is filed with the district court for the debtor's current address. It must be accompanied by

• a declaration in the form approved by the Minister of Justice, covering marital status, confirmation of good faith, a full inventory of assets (including matrimonial community property) and income for the last year, a list of all creditors with the amount and due date of each debt, details of pending court cases against the debtor and a list of payments exceeding one minimum monthly wage in the last 12 months;
• documents evidencing the circumstances declared, such as notarial deeds, employment contracts and loan agreements;
• statements of all the debtor's bank accounts and payment service accounts;
• a personal repayment plan, proposing the time frame and manner in which the debtor intends to satisfy the creditors;
• proof of notification of the National Revenue Agency under the Tax and Social Security Procedure Code;
• proof of payment of the state fee (the court may exempt the debtor from it upon proof of lack of means, but not from the ongoing costs of the proceedings, such as the trustee's fees).

What Happens If the Court Opens the Proceedings?

When the court finds that the conditions are met, it simultaneously declares the insolvency, opens the insolvency proceedings, orders interim measures and appoints a trustee. From then on, the debtor loses the right to manage and dispose of their assets, which become part of the insolvency estate. Assets exempt from enforcement (under the rules of the Civil Procedure Code) remain outside the estate, and the debtor continues to receive funds to support themselves and their family within the limits of income exempt from enforcement.

Creditors have three months from the announcement of the decision to lodge their claims in writing with the court, after which the trustee draws up a list of accepted claims. The debtor or any creditor may challenge in writing the inclusion or exclusion of a particular claim within 14 days of the list being announced. Only after the list has been approved does the court proceed to consider a repayment plan, if one has been proposed.

If a repayment plan is adopted and approved in the proceedings, it may provide for rescheduling, deferral or partial or full discharge of debts over a period of up to three years. If no plan is adopted or approved, the debtor is declared insolvent and the assets in the estate are realised by the trustee, usually by sale, to satisfy the creditors in the statutory order of priority, first secured claims, then the costs of the proceedings, maintenance and public debts, and only finally the unsecured claims of other creditors.

The Register Is Now Operational – Applications Are Being Accepted

This brings us to the most important practical question, which long remained unresolved. On 3 August 2026, the Registry Agency officially put into operation the Register of Insolvency of Natural Persons, the institution's first fully automated register, built with funding under the Recovery and Resilience Plan. The Minister of Justice issued an order putting it into operation, which means the personal insolvency law can now be applied in practice.

Individuals can therefore now actually file an application to open insolvency proceedings, no longer merely prepare but act. The register is accessible through the Registry Agency's Single Portal for Electronic Administrative Services, through which

• trustees file the acts and circumstances in the proceedings;
• citizens and institutions can carry out public searches of the debtor's file and obtain certificates of the circumstances entered;
• the state fees for administrative services range from EUR 5.62 to EUR 10.23.

It is important to clarify the exact role of the register. The application to open proceedings is still filed in the usual way, with the district court for the debtor's current address, accompanied by all the documents listed above. The register ensures the entry, announcement and publicity of proceedings already opened (including a single electronic file for each debtor) and does not replace filing the application with the court.

Since a debtor in good faith may declare personal insolvency only once in a lifetime, the decision whether and when to file an application deserves a careful, prior analysis of the specific case rather than haste.

Which Debts Are Never Discharged?

Even where the proceedings are completed successfully, personal insolvency does not extinguish all debts. The following remain outside the scope of discharge.

• Secured debts, to the extent that the mortgage or pledge has not been fully used to cover the claim
• Fines imposed by state or municipal authorities
• Compensation for tort, for example following a road traffic accident or damage caused by negligence
• Statutory maintenance for children, a former spouse or parents
• New debts arising after the date of the decision opening the proceedings

An important note for guarantors – the discharge of the debtor's debt in no way releases their sureties, guarantors or jointly and severally liable persons, or third parties who have provided security for the debt. Creditors retain the full right to claim the balance from them, including by enforcing against property pledged by third parties.

How to Approach Your Case

Every case of over-indebtedness is different. The combination of the type of debts, the existence of security and the family and financial situation determines whether personal insolvency is the right solution or whether it is better to seek an out-of-court settlement with creditors, which does not always require waiting for a court procedure. The assessment calls for a careful analysis of the specific facts against the conditions of the Act.