A current or former participant in Russia’s special military operation may use ordinary court bankruptcy. Since 23 May 2025, an SVO participant may also qualify for the special MFC out-of-court route under Article 223.2 of the Bankruptcy Act. Payments directly connected with SVO participation have special protection, while ordinary military pay, property and each debt still require separate classification.
What requires special attention
Income
Regular military pay is assessed under the general bankruptcy rules.
Protected payments
Special participation-related payments have a separate statutory regime.
Housing
Service accommodation and owned or mortgaged housing require different analysis.
Participation
Service duties may require advance arrangements for representation and communication.
MFC out-of-court bankruptcy for an SVO participant
Federal Law No. 111-FZ added a special Article 223.2 route for current and former SVO participants. It requires total debt from RUB 25,000 to RUB 1,000,000, no property available for enforcement, an enforcement document issued no more than one year before filing that was presented but remains wholly or partly unpaid, and an official participation certificate. Status alone does not replace the other tests.
Status
A current or former participant must have the prescribed certificate.
Enforcement
The document date, presentation and enforcement outcome are checked.
Property
Property available for enforcement may rule out the MFC route.
| Check | Documents | Why it matters |
|---|---|---|
| SVO participation | Prescribed certificate | Confirms the special Article 223.2 ground |
| Debts | Complete creditor and amount list | An omitted claim is not discharged automatically |
| Payments | Payment purpose and bank statements | Separates protected SVO payments from ordinary income |
| Spouse | Joint debts and marital property | The participant’s status does not bankrupt the spouse |
Can an SVO participant file for bankruptcy?
Federal Law No. 127-FZ contains no separate prohibition. A citizen may petition the arbitrazh court when the statutory signs of insolvency or insufficient assets are present. Since 23 May 2025, certain current and former participants in the special military operation may also use the out-of-court MFC procedure if its special debt, asset and enforcement conditions are met.
Procedure overview
See the full step-by-step guide to personal bankruptcy in Russia.
Military pay and protected minimum
Salary and other income are generally considered in the asset-realisation procedure. The debtor retains the statutory subsistence minimum for themselves and, where justified, dependants. A court may exclude additional necessary sums when the debtor proves the relevant circumstances.
Payments connected with participation in the special military operation
Not all military pay is wholly protected. A separate regime applies to special payments directly connected with combat participation or other circumstances specified by statute. Exclusion of a particular receipt requires evidence of its type, statutory basis, payer and bank coding. Statutory exceptions permit recovery for certain claims, including maintenance and personal-injury liabilities.
Military mortgage and the funded mortgage system
Personal bankruptcy does not by itself terminate military service or automatically close the participant’s individual funded-mortgage account. An apartment bought under the scheme is, however, commonly pledged both to the bank and to the Russian Federation represented by Rosvoenipoteka. The credit facility, targeted housing loan, NIS status and actual continuation of payments must therefore be reviewed separately.
| Point to verify | Why it matters |
|---|---|
| NIS status and individual account | Bankruptcy alone does not always make Rosvoenipoteka’s targeted-loan repayment claim immediately due; service status, the ground for discharge and account closure matter. |
| Rosvoenipoteka payments | Continuing funding must be confirmed. If funding has stopped, the debtor’s current liability under the bank loan must be recalculated. |
| Bank and state security | Sale, distribution and remaining obligations depend on both security interests and the contracts, not merely on the sole-home status. |
| Possible preservation mechanism | The Supreme Court directed the lower court to examine a settlement involving the bank, Rosvoenipoteka, the debtor and the financial manager, or a local restructuring plan. Neither route guarantees preservation. |
In case No. А41-92570/2022, the Supreme Court required the lower court to determine whether Rosvoenipoteka funding continued, whether the targeted housing loan had become repayable and whether the claims could be resolved without selling the debtor’s sole home. The answer depends on the individual evidence; there is no universal outcome for every NIS participant.
Documents to check before filing
- the bank loan, mortgage instrument and current payment schedule;
- the targeted housing loan agreement and individual NIS account information;
- an EGRN extract showing every encumbrance;
- the bank and Rosvoenipoteka payment history and any funding-suspension notices;
- service records and, where relevant, the ground for discharge or removal from the NIS register.
Effect on military service
Personal bankruptcy does not itself terminate military status. Separate clearance, appointment or position-specific requirements may still need to be assessed under the applicable service rules.
How to prepare
Separate ordinary pay from protected payments, collect account and property records, obtain military-mortgage documents, review marital property and arrange representation if service duties restrict participation.
Frequently asked questions
Can a contract service member file for bankruptcy?
Yes. Federal Law No. 127-FZ contains no separate prohibition for contract service members. The applicable court or MFC conditions must still be checked in the individual case.
Does bankruptcy automatically end military service?
No. Personal bankruptcy alone does not automatically terminate military status. Position-specific requirements are assessed separately.
Are participation-related payments taken?
Protected special payments are excluded from the estate, subject to the statutory exceptions.
Legal sources
- Federal Law No. 127-FZ on Insolvency;
- Article 223.2 on out-of-court bankruptcy;
- Article 14 of Federal Law No. 117-FZ on the targeted housing loan;
- Article 15 of Federal Law No. 117-FZ on repayment;
- Supreme Court ruling in case No. А41-92570/2022;
- Supreme Court review of personal bankruptcy cases.
- Federal Law No. 306-FZ on military pay and separate payments;
- Article 101 of Federal Law No. 229-FZ.
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