Quiet court: new initiative of legislators can save from sudden debt cancellation
A bill has been submitted to the State Duma prohibiting collectors and microfinance organizations (MFOs) from collecting debts through compulsory production. This means that such organizations will no longer be able to receive enforcement documents in a "quick" procedure, and their claims will be considered in a general manner — with a call from the parties, the opportunity to present evidence and discuss the amount of debt. Some experts warn that the ban could increase illegal lending and complicate the recovery process. Izvestia dealt with experts to see if everything was that simple and what it would change.
The law against judicial secrecy
A bill has been submitted to the State Duma prohibiting microfinance organizations and collection agencies from collecting debts through a simplified procedure — writ proceedings. 122 of the Civil Procedure Code of the Russian Federation, a creditor can obtain a court order without calling the parties, which immediately becomes an enforcement document. That is, money can be debited from the debtor, even if he is unaware of the lawsuit.
The amendments are aimed at eliminating this practice. Collectors and MFIs will no longer be able to use the loophole to secretly launch foreclosures. The whole procedure will take place in the format of a lawsuit — with notification, summoning the parties and the opportunity to object. That means more time, more transparency — and maybe more fairness.
Deputy Yaroslav Nilov, one of the authors of the initiative, believes that the existing system opens the door to abuse: "Today, fraudsters use a simplified procedure for obtaining court decisions. The defendant finds out about the case when enforcement is already underway. We propose to close this shop legally."
In practice, the executive order is indeed often used as a tool of pressure. According to lawyers, in cases up to 500 thousand rubles, the court is not obliged to notify the debtor in advance. A court order is sent by mail, but in reality it may get lost, get into the wrong place, or simply be ignored. And then the money disappears from the account, and the person is left with questions and stress.
Associate Professor of MFUA, member of the Russian Union of Auditors Tatiana Tverdova confirms that microfinance organizations use contract production to collect debt and accrued interest as soon as possible. An important point is that the debtor cannot object or explain himself before debiting the money. And the style of communication of the seekers is often psychologically oppressive, she notes.
Especially often, people who have taken out loans due to acute need get into such situations: for medical treatment, education, and emergency expenses. The bill, according to Tverdova, can restore the balance.
"The court has the right, guided by the principle of reasonableness and fairness, to reduce interest, to set a delay or installment plan for the execution of a judicial act at the request of the debtor," Tverdova said.
Currently, the Government of the Russian Federation has already commented on the draft law, pointing out the possible additional burden on the courts. The press service of the Supreme Court told Izvestia that no appeals have yet been received from the State Duma to develop a position of the Supreme Court of the Russian Federation on amendments to legislation. The Central Bank did not respond to requests from the publication at the time of publication of the material.
Judicial efficiency or pressure on debtors?
However, not all market participants are thrilled with the initiative. Representatives of self-regulatory organizations and industry associations believe that the problem is not so much in writ production as in the debtor notification system. If the notifications arrived on time, there would be no complaints.
According to the MIR SRO, the main problem is not the collection procedure, but the fact that customers themselves do not update their contact information. Emails are being returned, but notifications are not being received. Therefore, microfinance experts believe, it would be worthwhile to develop a digital notification system through "Public Services" rather than ban an entire institution.
Elman Mehdiyev, Chairman of the NAUMIR (National Association of Microfinance Market Participants) Council, agrees with them on the whole. He emphasizes that the reasons for not receiving orders lie in the unscrupulous behavior of the borrowers themselves: 95% of debtors whose debts ended up with collectors are contactless. People lose their SIM cards, change their addresses, and disappear. "Are the courts to blame for this?" — asks the representative of the financial market.
— And if someone thinks that such measures will lead to the fact that the market will try to settle everything at the pre-trial stage, let them answer themselves which is more profitable for the debtor himself: to pay a little more than 11% of the amount per year at the trial stage or 50 percent or more at the pre-trial stage? — Mehdiyev remarks.
Some experts are sure that even in the current system, the debtor has protection tools. The only question is whether he knows about them and uses them. Vladimir Gruzdev, Chairman of the Russian Bar Association, recalls: "A court order can be revoked within 10 days of receipt." And the court is obliged to do this — without explanation. Moreover, if the letter was not received for a valid reason, the deadline can be restored.
— If the debtor had a valid reason for the pass (for example, a business trip), then he has the right to restore the period stipulated for the cancellation of the order, — says the head of the AYUR. — Moreover, an order that has entered into legal force can also be appealed in cassation.
Gruzdev points to simplified proceedings — in this order, cases involving the recovery of funds up to 250 thousand rubles are considered, in particular. It also has its own peculiarities. For example, the trial takes place without calling the parties.
Although, he clarifies, even simplified procedures do not deprive debtors of the right to protection. After all, the main thing is not to ignore court correspondence.
Professor of the Department of Civil and Administrative Proceedings named after M.S. Shakaryan
Elena Streltsova of the O.E. Kutafin Moscow State Law University (MGUA) believes that the bill will not affect the market of collection agencies, since they usually work with already confirmed debts, including bank loans. And bank loans can be recovered not only in court, but also out of court through a notary's executive order, the expert notes.
Legal imbalance and microfinance attack
Nevertheless, even with the existing opportunities for contesting, the writ order puts the parties in an unequal position. A court order can be revoked — but only if the person finds out about it. And if not?
Meri Valishvili, Associate Professor at Plekhanov Russian University of Economics, emphasizes: "Microfinance companies indicate excessive amounts in their orders, without giving the debtor the opportunity to prove their case. The court simply issues an order based on the claimant's statement. No one listens to a person."
According to her, the bill is a step towards leveling positions: "It creates a chance for debtors to prove that the amount is unreasonable, that the interest needs to be reduced. This is important for social stability, especially in times of crisis."
The main problem of writ proceedings, according to her, is the inability to reduce the amount of the penalty. Thus, the law sets a limit on the amount to be collected on microloans in the form of fines and penalties, which cannot exceed 130%, that is, if the principal debt is 10 thousand rubles. rubles, then a fine and penalties, plus a maximum of 13 thousand.
"At the same time, micro—credit companies can indicate much more impressive amounts in their claims, and the defendant (debtor) does not have the opportunity to defend his interests and declare the claims groundless," Valishvili notes.
The proposed amendments, in her opinion, balance the interests of the parties and introduce certain restrictions on professional activities in the field of collection, that is, on the work of collectors. In fact, micro-credit companies "drain" the debt through a court order and transfer the documents for collection to collectors, who, despite stricter requirements for their activities, often use very questionable ways of dealing with debtors, she concludes.
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