08.04.2022

NEW RULES FOR COLLECTING MONEY FROM DEBTORS

Debt collection companies are prohibited from using methods such as harassment, coercion, threats, insults or physical violence to force debtors to pay their debts. This is provided by the Bill on collection of receivables under consumer contracts, submitted to the National Assembly. The activity of the debt collectors for over 30 years has been without legal regulation, and hence without the possibility of control by the institutions, reads the reasons for the bill.

Practice shows that these companies harass relatives of citizens who they consider debtors, harass them at work and in their homes, colleagues and neighbors, including by disseminating various types of information in public.

Undoubtedly, in these difficult times of pandemic and rising inflation through rising food prices and household bills, many Bulgarian households may be affected by this activity, which requires it to be regulated by law.

Therefore, the bill prohibits collectors from harassing citizens at their workplaces and at home, discrediting them in front of colleagues and their employer, as well as posting debt reports in public places. When looking for the debtor, they will have the right to do so only in writing or by telephone and no more often than an interval of 2 working days.

Ringing is also prohibited on weekends and between 20:00 and 7:00. The same prohibitions are expected to apply to original creditors. The law provides only for the companies entered in a special unified register with the Minister of Economy and Industry, and the companies entered in the register under Art. 3a of the Credit Institutions Act, to be able to collect receivables from consumers. They will be controlled by the Consumer Protection Commission under the Minister of Economy and Industry.

Requirements are introduced for the registration of debt collection companies - capital of BGN 500,000 and professional liability insurance. Individuals are prohibited from collecting debts. Convicted persons are prohibited from owning, managing or being in labor relations with collection companies.

In case of three consecutive violations of the rules for collection of receivables within one year, the registration of the collection company is deleted.

If the consumer considers that he is not a debtor, he will be able to terminate the out-of-court collection by the buyer of the claim by challenging his obligation. It is also possible for him to turn to an alternative dispute resolution body.

The original creditor is obliged to notify the debtor before transferring his claim to a debt collection company. The notification must contain data on the amount of the receivable, its basis, when the due date came into force, what amounts have been paid so far and which is the company to which the receivable will be transferred.

The original creditor will be obliged to enable the debtor to voluntarily fulfill his obligation within 14 days by specifying a bank account or other method of payment. The original creditor or the purchaser of the receivable, depending on who has the documents that establish and are related to the receivable, will be obliged to provide copies of them to the consumer at the written request of the consumer.

Debt collection companies are prohibited from levying on the principal any fees and expenses other than statutory interest.

The proposed draft law also introduces rules for the management and servicing of receivables when they are not directly transferred and the collection company collects the debt on behalf of the original creditor. Debt management companies must also meet certain requirements and be entered in the single register of debt collection companies. They are subject to the same rules on how to search for the debtor, as well as prohibitions on harassing relatives, colleagues, posting information about debt in public places and at work, calling late at night or on weekends.

A receivables collection company that systematically violates the rules will be deleted from the register, thus terminating the receivables collection activity.

Sanctions in the amount of BGN 10,000 to 50,000 are envisaged for violations committed by collection companies during the collection of receivables.

The proposed legislative changes aim to set rules and restrictions on the work of debt collection companies so as to ensure transparent and conscientious work, striking a balance between the ability of creditors to seek their claims in a legal, regulated manner and strict protection of human rights and consumer dignity.