The threat for the borrower
Banks can recover debt without court decisions, follows from the law (see reference), adopted by the state Duma on 22 June and approved by the Federation Council on Wednesday, June 29. The authors of the amendments by the group of deputies headed by Chairman of the Duma Committee on property Sergey Gavrilov.
The basis for debt collection will become an Executive inscription of the notary on the loan agreement follows from the new law. Having received this sign, banks will be able to speak directly to the bailiffs.
Amendment of extrajudicial collection of debts included in the law “On amendments to certain legislative acts of the Russian Federation (in terms of clarifying the provisions on the assessment of property)”. He makes changes in “fundamentals of RF legislation on the Notariat of 11 February 1993, in the Federal law “On insolvency (bankruptcy)”, “On appraisal activities in the Russian Federation” and others.
In the explanatory note to the bill stated that it is designed “to complement and clarify certain provisions of Federal law, and in particular introduces the concept of “salvage value” of the expropriated property and changes the rules of bidding.
But in the text of the bill after the first reading appeared that “the documents on which debt collection is indisputably on the basis of Executive inscriptions” are “credit contracts, except agreements, a lender which is a microfinance organization, in the presence of the specified agreements or additional agreements to them in terms of the possibility of collection of debts on Executive notary”.
The Chairman of the Duma Committee on property Sergey Gavrilov confirmed that we are talking about new rights for banks to recover overdue debts without a trial.
Collection is subject not only to the amount of debt and “interest in case of their calculation is provided by the contract, and the amount of expenses incurred by the claimant in connection with the Commission of the Executive inscriptions” (meaning the amount that the Bank pays the notary).
Now in indisputable procedure based on Executive notary) it is possible to recover only a debt on a security ticket (they give them to the Lombards), and also under contracts of storage and rent. According to the current legislation on notaries, the notary performs the Executive inscription in the absence of the debtor: the notary will inform him that the creditor has a right to recover his debt through bailiffs.
The lender must provide the notary with the documents confirming legitimacy of its claims against the debtor and a copy of the notification of the debtor about his debt. The debtor must be notified about the debt for two weeks before contacting the creditor to the notary. Debt, which the notary will be able to make an Executive inscription, should not be older than two years.
The Executive inscription is made by the notary pursuant to the terms of the contract, effectively replaces the court decision on collection of debt, and with it the Bank can directly go to the bailiffs, confirmed head of legal Department AKG “MEF-Audit” Alexander Ovesnov. If the borrower does not agree with the amount of recovered debts, he can try to challenge it in court, says Ovesnov, but in itself, this opposition of the foreclosure process will not stop.
For bad debts
Theoretically, the opportunity to appeal to the notary for an Executive inscription of the banks will appear immediately after the onset of delinquency in loan repayments, says a partner at the law office A2 Mikhail Alexandrov. “But the task of the banks is not the process but the result is likely to first the debtor will send reminders about debt and will try to resolve the situation with payments,” he said.
Head of Department on work with problem debts of the Bank Sergey Golets believes that banks will resort to extrajudicial punishment in exceptional cases, when the debtor violates the payment schedule. Banks will be guided, for example, provisions of the Federal law №353 “On consumer credit (loan)”: in article 14 of this law stipulates that early repayment be loans overdue more than 60 days within the last 180 calendar days.
Starting in 2016, the number of bad loans with arrears more than 90 days increased by 695 thousand and exceeded 10.2 million, announced June 22, the joint credit Bureau (OKB). By the end of may the cost of bad loans OKB was estimated at 1.2 trillion rubles, or 13.4% of total loans receivable (by the end of may in the hands of the Russian borrowers was 75 million existing loan with a total debt of 9.1 trillion). Faster only increases the share of overdue loans in the segment of mortgage lending since the beginning of year the volume of overdue debt on mortgages increased by 17% to 155 billion rubles (4.5% of the total volume of loan debt on the mortgage).
For debtors on the mortgage with the entry into force of the new law will not change anything, said the press service of the mortgage Bank “DeltaCredit”: the mortgage law prohibits the foreclosure out of court in respect of premises belonging to individuals. The property will still be levied through the courts, that is, mortgages under the new law will not fall, I agree Alexandrov.
The new rule will benefit banks and any other lenders, but not a microfinance organization, follows from amendments. In order to exercise this right, you need to register in the credit contract clause on the possibility of debt recovery by the Executive notary. The amendment will be extended to existing credit agreements, the amendments: clause about the possibility of debt recovery without recourse can be provided by additional agreement to the contract.
Banks will actively use this amendment and to include in credit contracts a condition about the extrajudicial recovery, predicts Ovesnov: “There are concerns that banks will be able to use this situation to their advantage, signing with the borrowers of the additional agreement to the existing credit agreements”.
The deputies will monitor the implementation of the new law and in case of problems will return to its study promises Gavrilov.
Alternative to collectors
The extension of the right of debt recovery without recourse to loans — the initiative of the Supreme court, which would relieve the courts, said Gavrilov.
That discussed the possibility of introducing extra-judicial debt collection in March, “the Russian newspaper” told the President of the Federal notary chamber Konstantin Korsik. It was assumed that the new mechanism would be for banks alternative to appeal to collectors, he explained: “the collection Procedure will be simplified and become transparent and legitimate, obviously. Lenders now easier for collectors to handle, than to go to court. Because the judicial process takes time and requires some expenditure. And the bailiff acts in accordance with the law. He doesn’t call in the night, paints the walls, not sets fire to baby strollers. You can guarantee that the foreclosure process will take place within the legal framework”.
It is premature to say that changes in the law would facilitate the possibility of foreclosure, said the President of the collection Agency “Sequoia credit consolidation” (one of the leaders of the Russian market of debt collection) Elena Dokuchaeva. The receipt of the Executive notary is as tedious as a court order in court, she says, and even with the writ, the creditor will depend on the work of the service of judicial bailiffs.
The bailiff service is extremely slow, Alexander says, the need for the services of collection agencies in Russia arises because, in fact, a person who does not pay the debts, nothing can be done: it is impossible to confiscate its property, apartment, difficult to challenge his dealings, and by the time the decision of the court, he has nothing — he rewrote someone else.
Press service of the Federal bailiff service has not responded to written requests and phone calls .
It is unlikely the new mechanism will be a viable alternative to sewers, says Ovesnov. Debt collectors often transferred under the assignment agreement or the Agency agreement without a court decision and in full — including not only the debt on the loan, but all the contractual interest and penalties, and on the Executive notary is proposed to recover only the payable under the contract and the interest due, without penalties, explains Ovesnov. Exactly what will not have to pay a penalty, should make life easier for borrowers, expects Gavrilov.
To use a new tool, in particular, is planning a Bank, said Char. Despite the fact that the recovery is not subject to all types of debt, and the fee is higher than upon receipt of a court order, the use of this law seems reasonable, he said: first of all, reduced the term of the Executive document, plus the process will become more systematic.
“Sequoia credit consolidation”, according to her representative, also intends to use innovation as a complementary or alternative mechanism to the courts.