On 3 April 2025, the Bulgarian National Assembly took a significant step toward introducing personal insolvency proceedings by passing, at first reading, three separate draft bills. After years of debate and unsuccessful legislative attempts — including a failed vote in March this year — this development lays a concrete foundation for the regulation of personal insolvency in Bulgarian law.
What’s New?
For the first time, there appears to be tangible political consensus on the matter. The three draft bills, submitted by different parliamentary groups, are expected to be consolidated into a single text, which will then be subject to a second reading. This means the final version of the act has yet to be crafted, and key aspects of the regulation are still the subject of diverging proposals.
Why Is the Topic Back on the Agenda?
The issue of personal insolvency is not new — it has been actively discussed for over a decade. Nonetheless, Bulgaria remains one of the few EU member states without an effective legal framework that allows individuals to obtain protection in cases of objective insolvency.
In addition to the pressing social need, this legislative progress is also strongly driven by Bulgaria’s commitments under the National Recovery and Resilience Plan. The adoption of such legislation is among the reforms on which access to European funding depends.
What Do We Know So Far?
The proposals apply exclusively to individuals who are not registered traders. The scope also includes solo practitioners or persons practicing other independent activity, provided it does not qualify them as traders under the law.
There are differences between the drafts regarding the period after which an individual is presumed insolvent. One bill proposes a 6-month period during which the debtor has failed to fulfil due monetary obligations; another suggests a 12-month period.
There are also conflicting proposals regarding the minimum indebtedness threshold required to initiate proceedings. One draft sets the threshold at 10 minimum monthly wages, while another proposes 24.
The question of whether public debts (e.g., to the National Revenue Agency) should be included in the proceedings is also under debate. Some drafts provide for their inclusion; others explicitly exclude them from the scope of the act.
The protection of a debtor’s sole residence, the possibility of preparing a debt repayment plan, and the plan’s duration also vary across the proposals.
Who Will Be Affected by the Act?
If adopted, the act will have a real impact on both individuals in financial distress and creditors:
- Individuals who have fallen into lasting financial difficulty due to life events or economic hardship;
- Banks, credit institutions, and leasing companies, which will need to adjust their internal risk management, credit assessment, and debt recovery practices;
- Collection agencies, telecom providers, and other businesses entering into deferred payment contracts with individual consumers;
- Employers and service providers who may need greater legal certainty when dealing with employees or customers undergoing personal insolvency proceedings.
What Comes Next?
A consolidated draft act will now be prepared based on the versions adopted at first reading. If the current momentum and political will are maintained, there is a realistic prospect of the law being adopted in the coming months.
If this topic is relevant to your business — whether as a creditor, employer, service provider, or simply from a personal legal interest — feel free to contact us for tailored legal advice and analysis of the potential implications of the new legislation.
You can access the full draft bills here.
Тhe article above is for information purposes only. It is not a (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law.
