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Debt Collection in Russia

Debt Collection in Russia

Updated on Monday 25th April 2016

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Lately, because of the economic context, more creditors are forced to contact debit collection agencies in order to recover the debts from various companies.

Unfortunately, no special law is providing the grounds of the debt collection in Russia. The debt collection falls under the provisions of the Civil Code and several laws in bank and banking industries. Because of the fact that in most countries special regulations regarding the debt collection procedures apply, foreign debt recovery agencies are more successful than the local agencies. Any entrepreneur or a private company can a debt collector in Russia.

 

The debt collection agencies’ clients are especially: banks, financial companies and credit institutions, telecommunication companies, utility providers and construction companies.

The debts may be recovered in two different ways: the first one implies the debt collection agency to pay the amount to be recovered to the company and keeps the amount collected or it receives a percentage from the recovered amount of money.

The market where the debt collection agency operates can be divided according to different criteria: the coverage area, the type of debtor, technique and ways of work.

Problems for debtors in Russia

A creditor must be very careful what agency is hiring for collecting the debts. A lot of agencies are paid with a commission on the recovery, so it has no scruples about the method of recovery of money. The little is the chance to recover money, the higher the percentage from the recovered amount of money.

The relationship between the creditor and the debtor is not important for some debt collection agencies so the hiring company must choose a subtle and professional agency.

The first step in recovering the debts is calling the debtor and trying to persuade him to pay the debts. If this doesn’t work, a collection agency can be hired to call the debtor. Usually this is working, because of the high pressure of being called by the collector.

Another method is paying the debts in partial payments, even though it’s a time consuming method.

It’s very important for the economy for companies to be solvent and be able to pay their debts. If not, then the creditor may not be able to pay its own debts so a vicious circle is created.

The new Bankruptcy Law in Russia

In order to protect debtors from collectors overstepping the legal boundaries of debt recovery, the Government passed a new legislation under which natural persons can file a petition with a Russian general jurisdiction court and have their cases heard. For entrepreneurs, the case will be presented before the Arbitration Court in Russia.

In both situations, the case will be taken over by a receiver who will first propose a debt restructuring plan. The second phase will imply selling the company’s or the individual’s assets in order to cover the debt. However, the court can also help the debtor and the debt collectors to reach a settlement agreement for the repayment of the outstanding amount.

Our law firm in Russia can offer you more details about the debt collection proceedings and the new legislation. If you have a debt to collect, you may contact a Russian lawyer who will assist you during the procedures of debt collection and protect your assets. You may contact our attorneys in Russia also if you are a debtor and you have legal problems with the local debt collection agencies that may harass you.

 
We invite you to watch a short video about the debt collection procedures in Russia:

 
 
 

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