Bulgaria has taken a major step toward modernizing its insolvency framework with the adoption of the first-ever Law on the Insolvency of Natural Persons (LINP). Passed by the Parliament on June 19 and set to come into force in July 2025, the law offers a formal mechanism for non-entrepreneurial individuals struggling with debt to seek relief through the courts.

Under the new law, individuals who have been unable to meet their financial obligations for more than 12 months and owe at least BGN 10,770 will be eligible to file for insolvency. The process is voluntary and can only be initiated by the debtor, with creditors having limited authority to intervene.

To qualify, debtors must act in good faith and cooperate fully with the court, which oversees the insolvency proceedings. The law outlines a two-phase process: an initial assessment, followed by either approval of a repayment plan or, failing that, liquidation of the debtor’s assets. Certain categories of debt—such as child support and court-imposed fines—remain exempt from discharge.

Lawmakers say the legislation aims to balance the interests of debtors and creditors while offering overburdened individuals a second chance at financial stability.