Restructuring of housing and communal services debt

Before agreeing on a repayment schedule, it is important to understand one key point: the amount you are being asked to pay is almost never the same as the amount that could be recovered through the courts.

Utility bills usually contain items that cannot be recovered: debts older than three years, late payment charges exceeding the permitted limits, charges for services that were not actually provided, and amounts doubled as a result of court orders of which you were not even aware.

Signing a utility debt restructuring agreement without checking it first means that you have voluntarily acknowledged the entire amount. After that, it will be much more difficult to challenge it.

+38 095 554-54-24 — legal advice

What can be excluded from the debt

Debts older than three years. The limitation period is three years (Article 257 of the Civil Code). Anything beyond this period is not subject to recovery.

But there is a crucial detail: the court applies the limitation period only at the defendant’s request. If you have not made such a request, the court will recover everything, even a debt dating back ten years. This is precisely why people lose cases they should have won.

Penalty interest. Its amount is limited by law and cannot exceed a specified proportion of the debt. Furthermore, claims for penalty interest are subject to a shortened limitation period of one year.

Services that were not provided. If there was no heating, hot water, rubbish collection or cleaning of the entrance hall, you do not have to pay. However, the fact that the services were not provided must be recorded in an official report, and preferably in advance.

Incorrect charges — based on floor area, the number of registered residents, meter readings, or absent residents.

Debts of the previous owner or tenant. You are not obliged to pay for someone else’s period of tenancy — but utility companies often ‘pass on’ the debt to the new occupant.

Court order: how debts are actually recovered

Utility companies are collecting debts on a massive scale through court orders — it’s quick, cheap and without your involvement: the court considers the application within 5 days, without a hearing and without summoning the parties.

The order is then sent to the enforcement service: bank accounts are frozen, wages are garnished, and travel abroad is restricted. Many people only find out about the debt when their card is blocked.

Key point: a court order can be set aside within 15 days of receipt. Simply submit an application — the court will set aside the order almost automatically, without examining the merits of the case.

What this achieves: the case moves to civil proceedings, where you can then:

• invoke the limitation period — and have anything older than three years written off;
• challenge the penalty charge;
• prove that the services were not provided;
• demand a recalculation.

Very often, the debt is subsequently reduced by half or more.

Restructuring: when it is advisable

Restructuring is an agreement with the service provider to repay the debt in instalments, according to a schedule.

When it is advisable: the amount has been verified and is genuine, you have a stable income, and you wish to retain your subsidy or avoid court proceedings.

When it is not advisable:

• the amount is unverified — an audit first, then negotiations;
• a significant portion of the debt is more than 3 years old — why acknowledge something that can no longer be recovered?
• the majority of the amount consists of penalty charges, which can be waived anyway;
• you objectively cannot keep to the repayment schedule — in which case this is simply postponing the problem.

The main pitfall: by signing a restructuring agreement, you acknowledge the debt. This resets the limitation period — the clock starts ticking again. In other words, a debt that you might not have had to pay at all becomes fully recoverable.

Subsidies and debt

Having outstanding debt may affect your eligibility for a subsidy. However, the mere fact of having a debt is not an automatic ground for refusal: what matters is whether a repayment agreement has been concluded and whether it is being honoured.

This is one of the few cases where debt restructuring is genuinely beneficial — even if part of the debt could be contested.

When a solicitor is not needed

If the debt is small, the charges are transparent, and you are able to pay — then pay. You can arrange debt restructuring yourself by contacting the supplier.

You need a solicitor when:

• you have received a court order — the deadline here is 15 days;
• your account has already been seized or your wages are being garnished;
• the debt is more than three years old;
• a significant portion of the amount consists of penalty charges;
• services were not provided, yet bills keep arriving;
• the debt belongs to someone else — the previous owner or occupant;
• the charges are clearly incorrect.

How we work

1. We analyse the debt calculation — by period, service and amount.
2. We set aside the court order, if one exists — this transfers the case to adversarial proceedings.
3. We invoke the limitation period — we remove everything older than three years.
4. We challenge the penalty and charges for services not provided.
5. We negotiate regarding restructuring — based on the actual amount.
6. We defend you in enforcement proceedings — we lift any seizures.

Cost of services

Full price list · Housing lawyer

Questions and answers (Restructuring of utility debt)

Can you avoid paying a debt that is more than three years old?

Yes, but only if you invoke the limitation period. The court will not raise this issue of its own accord and will recover the full amount.

What should I do if I’ve received a court order?

Submit an application for its revocation within 15 days. The court will revoke the order almost automatically, and the case will move to litigation proceedings, where you can contest the amount.

I found out about the debt when my card was blocked. What should I do?

Obtain the enforcement proceedings documents and the court order as a matter of urgency. The time limit for setting it aside runs from the date of receipt — so there is still a chance, even now.

Can I challenge the late payment penalty?

Yes. Its amount is capped by law, and a shortened limitation period — one year — applies to claims for late payment penalties.

There was no heating, but the bills are still coming. What should I do?

Demand a recalculation. However, the fact that the service was not provided must be recorded in an official report — preferably straight away, rather than a year later.

Do I have to pay the previous owner’s debt?

No. You are only liable for your own period of occupancy. The transfer of another person’s debt to a new occupant is contestable.

Is debt restructuring worthwhile?

Only after verifying the amount. By signing the agreement, you acknowledge the debt — and this interrupts the limitation period: the clock starts running again.

Does the debt affect my housing benefit?

It may affect it. However, having a debt repayment agreement that is being honoured usually resolves this issue — this is one of the cases where debt restructuring is genuinely beneficial.

What documents should I bring to the consultation?

Utility bills, a debt statement from the supplier, a court order (if applicable), enforcement proceedings documents, and notices of non-provision of services.

Consulting a solicitor regarding the restructuring of utility debt with the company ‘Svarog’

Do not rush into signing a repayment schedule. Send us the debt statement — we will check how much of it can actually be recovered in court. Very often, once the ‘overdue’ portion and penalty charges have been waived, negotiations start from a different figure.

+38 095 554-54-24 · Kyiv, 7 Khoriva Street (Podil) · Mon–Fri 9:00–18:00