WHAT TO DO WHILE THE COLLECTORS THINK TO YOU?
The consequence of the formation of the credit market was that many citizens of Ukraine made financial loans without having objectively assessed their own solvency. Since it is unprofitable for credit companies to engage in the mere collection of small arrears from their borrowers, they practice the transfer of outstanding loans to collection companies.
The relevant agencies in this situation overcome the debtor by phone calls, write to him, and often threaten. What to do if, to put it mildly, you are disturbed by collectors, many are worried now. But, at the same time, the financial debt does not affect the legal human rights conferred on it by the rules of current law.
Principles of work of collection companies
Let’s first clarify who the collectors are. The institutions in which they work are involved in the recovery of problematic, overdue loans. These organizations are a type of factoring financial institutions that buy debt from debtors “cheaply” and “live” for interest earned.
Despite this, the cooperation of credit institutions with collectors is mutually beneficial, because the process of collecting money is not easy: it requires time and funding. Litigation with respect to outstanding loans often lasts for years and is often completed by a decision in favor of the debtor rather than the injured party.
Collection companies are called financial firms, which buy credit debt with the right to further recover them from the defaulter.
Transfer of debt to collection companies
Because, to sue their unscrupulous borrowers credit companies unprofitable, they often practice the transfer of debt defaulters, or rather, the sale of their collection agencies.
The debt of a bank customer can be sold to collectors due to its closing of a significant delay in credit payment.
In this case, only the details for debt repayment are changed for the client, while the amount of the debt is maintained.
In order for the bank to exercise its right to transfer client debts to a collection company, there is no need for a court decision. Most often this right of a financial and credit institution is specified in credit agreements.
In case of a slight delay in repayment of loans, which is 1 or 2 months, and in the absence of the client’s refusal to take out credit obligations, his debts to third parties cannot be transferred.
The condition for the sale of the respective debts is a delay in payment on the loan for a period of three months, unless such a situation contradicts the content of the agreement concluded between the borrower and a loan from the Bank (MFI).
If the client’s debt is transferred to another financial institution with all the consequences, the debtor must be notified.
There are often cases where fraudsters are represented by employees of collection structures. Such offenders typically obtain information about bank borrowers illegally. Payments to the relevant fraudsters with legal repayment have nothing in common. These unlawful acts entail criminal liability in accordance with the Criminal Code of Ukraine (Article 190).
The legal basis confirming the transfer of rights related to debt collection is the conclusion of a factoring agreement between the credit institution and the collection agency. The client in this case retains the right to apply to the bank in which he took the loan, and to clarify the data on the transfer of its debt to collectors.
The refusal of collectors to provide documentation confirming their authority may be interpreted as fraud.
According to the Civil Code of Ukraine (Part 2, Article 517), borrowers have the right not to fulfill their financial obligations to receive official proof of transferring their debt to another institution.
There is no legislation regulating the activities of collecting societies on a legal basis in our country. That is why liability for wrongful acts of collectors is enshrined in the Penal Code. But, recently, in the first reading the Verkhovna Rada adopted the Law on Collector Activity, which already clearly spelled out the rights and obligations, responsibility of the order of collection of funds, etc.
What collectors are allowed by law?
The main legal method of collecting financial debt in our country involves appeals to the courts. But this kind of action is both disadvantageous for credit and collector companies: relevant lawsuits often take years, and you have to pay court fees.
Given this nuance, the debt collection process of a collection company has two stages:
- Representatives of the credit institution make known to the debtor that his debt has been transferred to another lender (this action, called “Soft collection”, can be done by a phone call or e-mail).
- The employees of the collection company contact the client to repay the debt (they can come home and to his place of work, to negotiate by phone, send letters of claims, etc.) The second stage is called “Hard collection” and is used if the initial stage work did not bring the desired results.
The main way to collect debt through court is to deduct a portion of the borrower’s basic income. If the debtor receives a minimum wage, the amount of the write-off may not exceed 20%.
Therefore, the employees of the collecting authorities are allowed the following actions:
– notification of the defaulter on the demand to repay the debt;
– phone calls;
-the debtor’s email address;
– representation of interests of the organization in court;
-Use only the number of the defaulter, which is recorded in the credit agreement.
In accordance with the rules of criminal procedure and civil law in force in Ukraine nowadays, the following actions of the employees of the collection offices are prohibited:
– anonymous actions – the collector is obliged to present himself to the debtor, giving his personal data, the organization in which he works, provide the registration number of the respective company and a power of attorney, confirming his authority;
-communication with the defaulter at night (22.00 – 8.00 on weekdays and 20.00 – 9.00 on weekends);
– insulting debtors, the use of physical force, the threat of physical slaughter with a defaulter or his family members up to murder;
– arbitrary increase in debt when the debtor is “put on the counter”;
– destruction and damage to the property of the borrower;
penetration of debtors’ housing without their consent or without a court order;
– disclosure of the debt amount of a third party (or several persons) without the permission of the borrower, received in writing;
– misleading the defaulter to force him to repay the debt.
If the collector does not pre-agree with the non-payer of the meeting, calls him during off-hours, threatens, promises to deprive the debtor of liberty and harm his relatives – his actions are illegal, you can safely contact the police. Keep all violations, if possible.
It is also illegal to disseminate private information about a defaulter provided to a collector by a credit company, anonymous, fraudulent acts and seizure of material assets from a borrower without a court order.
Well, if you can’t handle it yourself – seek the help of professionals! Attorneys at the Prikhodko Law Firm and Partners know how to help you.
Author: Andrey Kubov