Separate Settlement Agreement within a Citizen’s Bankruptcy Case for Claims Secured by a Mortgage on a Sole Residence

The article analyzes the legal status of a debtor’s sole residential premises in personal insolvency (bankruptcy) proceedings. It examines the procedure for concluding and approving by an arbitrazh (commercial) court a settlement agreement with a creditor whose claims are secured by a mortgage (real estate pledge) over such property. The author identifies the conditions for, and determines the legal consequences of, the approval of an agreement between an individual debtor and a separate bankruptcy creditor. Taking into account the objectives underlying the legal regulation of the relevant legal relations, the article substantiates the priority of localized restructuring of obligations secured by collateral. The article also introduces the concept of judicial override and concludes that a court may dismiss unfounded objections raised by a secured creditor and approve a localized settlement agreement notwithstanding the creditor’s lack of consent.

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