New rules for non-performing loans introduce changes to the Consumer Credit Act (CCA) and the Consumer Real Estate Credit Act (CCA). They are offered through a new Credit Servicers and Credit Buyers Act uploaded for public service.
The credit institution will be obliged to provide the consumer in a timely manner and before any change to the terms of the credit agreement – a clear and comprehensive list of all such changes, a schedule for their introduction and the necessary details, including the name and address of the national authority before which the consumer can file a complaint.
The current national legislation does not provide a legal regime for the implementation of credit servicing activities, which creates prerequisites for the obligations of every citizen to be collected practically by every economic entity in our country, without the possibility of institutional control by the state. This lack of legal regulation creates serious risks of harming the fundamental rights and legitimate interests of consumers through various methods, including “seeking” claims with expired statute of limitations and resulting from unfair clauses or applied unfair commercial practices, the reasons for the bill state. the financial portal pariteni.bg.
With the proposed legislative amendments, creditors are obliged to implement restructuring measures within reasonable limits before opening a procedure to realize the collateral. When choosing specific measures, creditors must take into account the consumer’s individual circumstances, his interests and rights and his ability to repay the loan, including when the loan agreement is secured by residential real estate, which is the consumer’s main residence.
Restructuring measures may contain certain concessions for the consumer, such as full or partial refinancing of a credit agreement or modification of its existing conditions, including, inter alia, extension of its term, change of the type of credit agreement, postponement of payment of all or part of the repayment installment for a certain period, interest rate change, grace period offer, partial payments, currency conversion, partial forgiveness and debt consolidation.
The draft law provides for a licensing regime for the performance of the activity of servicing claims on non-performing bank loans. With the latter, the minimum pan-European standards and requirements for the activity were introduced into the national legislation, guaranteeing the effective management by buyers who do not have expertise and experience in credit servicing or are not familiar with the national specifics of the relevant local market. In this way, a wide range of international asset management companies, investment funds and others will be able to enter the Bulgarian market of non-performing loans and contribute significantly to reducing the risks of accumulating a large number of non-performing loans on the banks’ balance sheets, in the presence of established safety mechanisms to guarantee the protection of borrowers’ rights.
The draft law introduces a legal possibility for individuals and legal entities acting within the scope of their commercial activity to acquire such receivables. With the amendments proposed by the transitional and final provisions of the draft law, the activity of acquiring claims on non-performing loans from credit institutions is excluded from the registration regime under Art. 3a of the Law on Credit Institutions (LKI).
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