Russian money is being sued. Can microloans be sued by the debtor? In what cases and when can a microfinance organization sue a debtor?

Living on credit is also a kind of art. They tell us everything about the West, which has been living on borrowed funds for years and generations. Yes it is. But there, in people’s heads, the habit has already developed of controlling their debt obligations and approaching the issue of credit wisely. Here, people often behave incorrectly. They don’t think about the loan or its terms, they just borrow money and spend it. This invariably leads to exorbitant debts and a debt hole, from which it can be very difficult to get out.

Microfinance organizations, even at the dawn of their activities in Russia, did not offer particularly attractive credit conditions. According to the microloan agreements, it was clear that you would receive the money quickly, but later, for each day of delay, the debt would begin to grow at a gigantic rate of 500-700% per annum. Therefore, even a very small loan will quickly grow into a huge problem. But people still decided to take out a loan from microfinance organizations (MFOs).

Today, MFOs are divided into large and respectable ones, which care about their own reputation and do not allow illegal actions in their work. The rest of the MFOs are not so large, and not so respectable, and they do not care about their reputation, so any violations that you can imagine can occur there, with all sorts of consequences for the borrower. If there is an urgent need to contact an MFO, then it is safer to choose a large and reputable company. This will at least not be a big guarantee of legal treatment towards you.

So, you took a certain amount of money from a microfinance organization and signed the documents offered to you. What can you expect after?

Afterwards there may be a trial, it is very similar to if you cannot pay the debt. The MFO will most likely begin to collect it through the court. At this stage, it is better to enlist the support of our credit lawyer and file a counterclaim, if there are grounds, for example. Our loan lawyer will be able to evaluate the documents that were given to you to sign and, possibly, find violations in them that will help save you from a debt trap and paying huge interest on the loan. Federal Law No. 151-FZ of July 2, 2010 “On microfinance activities and microfinance organizations” established a list of violations that may become grounds for the borrower to go to court:

the loan agreement was drafted incorrectly and is therefore unenforceable
the debt was transferred to third parties without the consent of the borrower
The loan agreement was terminated unilaterally by the MFO
credit conditions were changed in a direction unfavorable for the client
MFO refuses to return loan insurance or other payments
The client receives threats and insults from MFO employees

Most of the violations from this list can only be found and assessed by a lawyer. The borrower can file a claim in the world court (when the amount of the claim is less than 50,000 rubles) or the district court (when the amount of the claim exceeds 50,000 rubles). The claim is filed by mail or during a personal visit to the court.

Do microfinance organizations go to court?

As mentioned above, they serve it very often. The microfinance organization is interested in resolving the issue with the debtor as quickly as possible. Through the court - this is the fastest way. In addition, this does not contradict the law, which is very important for organizations that care about their own reputation. An MFO files a lawsuit in the following cases: the debt is not repaid even in small payments, that is, the borrower demonstrates complete disinterest in repaying the loan; The MFO knows that the borrower has valuable property or has movable and immovable property as collateral; the debt has grown to an amount exceeding 50,000 rubles, in this case there is the right to charge fines and penalties, which can be claimed through the court.

Courts with microfinance organizations (MFOs)

Our lawyers know best how to win a case against an MFO. In court, you can successfully resolve the issue of a debt repayment schedule: make it convenient for the borrower, protect him from daily “dripping” interest.

Also, the terms of the agreement can be considered illegal; for this, a lawyer must conduct a preliminary investigation and establish violations of the borrower’s rights. The last reason why a loan agreement can be considered void is the incapacity of the borrower, that is, the individual could not realize what he was doing, and therefore the incapacitated person is not able to pay the debt.

It is very important to understand that even if the court recognizes the agreement as void, this will only exempt you from penalties, fines, and interest charges, but you will still have to return the amount of the debt itself, because the money was spent by you.

It is very important for the court to understand that the debt from the microfinance organization was taken out due to extremely difficult life circumstances and was spent on something very serious: treatment, training, purchasing something vital, helping the elderly or disabled. In a word, the most important thing is that this is not a spontaneous decision and not spending money on entertainment. It is important to prove this in court (any financial documents). Only in this case can you count on the favor of the court, getting rid of huge penalties and creating a convenient loan repayment schedule.

Microfinance organizations issue loans to almost everyone, even clients with a bad credit history. But this does not mean that unscrupulous borrowers may not repay money: MFOs have many legal opportunities to collect the debt. Therefore, before taking out a loan, you need to ask which MFs sue debtors and under what circumstances.

MFOs specialize in providing microloans at high interest rates. On average - 2% per day of the original amount borrowed. Typically, the loan does not exceed 15-30 thousand rubles and is issued for a month or six months. If the client needs a larger amount, the period may be extended. Managers calculate interest in advance, divide the amount into equal parts, which must be paid after a certain period of time. Mostly once a week. If this is not done, a fine will accrue just two days after the delay, so if it is not possible to repay the debt on time, it is better to renew the agreement on a paid basis, extending the loan term.

If the debt period is too long, the MFO can legally sue the borrower for violations of the terms of the loan agreement. However, litigation is not a common practice due to a number of reasons:

There are no representations and legal support in the region where the debtor lives;
The debt is not too large: the loan amount has already been repaid, all that remains is to receive interest and penalties;
The borrower has no income, so a positive decision in favor of the plaintiff does not guarantee a quick return of the money;
Stopping the accrual of penalties after filing a claim, the possibility of reducing the debt by reducing penalties.

MFOs do not sue because it is easier and more profitable to sell the debt to collectors. For the debtor, this is not the best option, given the working methods of collection companies, which often balance on the edge of the law, extracting debt from the client. Moreover, they start work immediately.

Grounds for going to court

In the first two to three months after a delay in payments, the microfinance company will not sue. One of the reasons for this is penalties and interest, which accrue daily, increasing the debt. MFOs file a lawsuit when the debt exceeds a certain amount.

The microfinance organization can easily prove that it is right, since it has on hand all the necessary documents with the borrower’s signatures.

It is a mistaken belief that an MFO will refuse to sue because of legal costs. If the amount of debt does not exceed 20 thousand rubles, the state fee for filing a claim is up to 4% of the amount of debt. Moreover, if the verdict is in favor of the plaintiff, the debtor is obliged to pay court costs.

List of microfinance organizations that sue their clients

Any microfinance organization can sue an unscrupulous borrower. Among them are such organizations as:

Moneyman;
Urgent money;
Turboloan;
E-cabbage;
Webbankir;
Viva Money;
MigCredit;
Zaimer.

If an MFO has already sued you, what are your prospects?

If an MFI has filed a lawsuit, there is no need to avoid a court hearing, since failure to appear is not an obstacle to the consideration of the case. It is worth noting that litigation is even beneficial for the defendant, since after filing a claim, penalties and interest cease to accrue.

The defendant can use a court case with a microfinance organization to his advantage by filing an application to reduce the amount of debt if its size significantly exceeds the borrowed funds. Usually the reduction occurs due to the amount of the penalty, since interest is calculated according to the concluded agreement and the judge does not have the right to cancel it.

Thus, the opinion that the court will completely release the debtor from debt obligations is erroneous. The debt will be repaid through wages or foreclosure of the borrower's property. Only housing and basic necessities cannot be confiscated.

If the plaintiff or defendant disagrees with the judge's verdict, an appeal is possible. The debtor can challenge the decision only with serious grounds: statements about the lack of funds to repay the debt will not be taken into account. An appeal can be filed if errors were made during the consideration of the case. It could be:

Lack of evidence to make the right decision;
Incorrect application of legal norms;
The defendant was not notified of the date of the court hearing, which is why he did not come to court;
There is no record of the court hearing;
Lack of signatures on the court order.

If an appeal is not filed within 30 days, the decision comes into force and the bailiff service takes over the case. In this case, it is necessary to pay for their work. Bailiffs initiate enforcement proceedings.

In order to comply with court decisions and collect the debt in favor of the plaintiff, bailiffs have the right to seize the borrower’s property and bank accounts, prohibit leaving Russia and driving vehicles.

If there is money in the accounts, it will be written off in favor of the microfinance organization. If the defendant works, a writ of execution is sent to his work, after which 20% of the salary begins to be debited to the creditor’s account. If there is a complete lack of funds to pay off the debt, the property is seized and sold.

How to win a case - contact a lawyer or defend yourself

The case with microfinance organizations usually ends in favor of the latter. The defendant can win the case only if he contacts an experienced lawyer who is well versed in the legal intricacies. On his own, without having the necessary knowledge, the defendant will not only not be able to win the case, but also to soften the terms of the loan agreement. As a result, the debt will have to be repaid in full.

After examining the documents, he may find that:

the contract is unenforceable due to enslaving conditions;
the structure that provided the loan did not have the right to do so;
the client is not capable of taking responsibility for his actions;
various threats from a credit institution that have been officially documented.

The defendant must take into account that he will still have to pay for the services of a lawyer and court costs, so one must be prepared for financial waste if the MFO goes to court.

Installment plan and deferment of judgment

If the defendant can convince the court of his insolvency, the judge may grant a one-year deferment. Also, during the trial, you can come to a settlement agreement with the MFO, which is concluded in court and becomes binding on both parties. After this, the claim is withdrawn and the case is stopped.

The settlement agreement provides for the defendant's agreement to repay the debt if the plaintiff agrees to debt restructuring. It should be noted that many microfinance organizations agree to this option and are often ready to reduce the penalty and even write it off completely.

Often, lenders will offer to issue a new loan, which will include the debt along with interest, which must be repaid. Naturally, the amount in this case will be larger and the interest will be higher. The debt is divided into equal parts, which allows you to evenly distribute the load; the period for full payment can be extended.

Bankruptcy

There is another opportunity to pay off your debts - to declare yourself bankrupt, for which you should file an application with the court. After this, a manager is appointed who receives all the data on the borrower’s financial transactions and the right to manage his money. As a result, the borrower is left without property, but pays off his debts.

Limitation periods

The microfinance organization has the right to sue for debt collection within three years after the last payment was made. After this time, the debt can be written off beyond the “statute of limitations”, but only through the court. Theoretically, this is possible if the debtor is suddenly forgotten, which in practice is extremely rare.

Is it possible to avoid paying off debt?

If the statute of limitations has not expired, the debtor may be excused from paying the debt upon death. If his heirs do not inherit the property, they may not pay their loan obligations. If they enter into inheritance rights, at the same time they take on the debt of the deceased and are obliged to repay the loan.

Jurisdiction is one of the key principles of microcredit in Russia. It is adhered to by all organizations working in this financial field. It means only one thing - any conflicts that arise between the lender and the borrower must be resolved in the courtroom. No collector, microfinance organization or private individual has the right to intimidate a debtor, break into a house to take away money or describe and take away property. Creditors don't even have the authority to talk about your debt with outsiders, such as employers or neighbors. Security service employees or microfinance organizations can call the phone number specified in the application or send claims by mail - only a bailiff can take specific measures on the basis of a writ of execution.

In what cases does an MFO sue?

The basis for filing a claim is failure to fulfill the obligations specified in the microloan agreement. The borrower did not make the next payment - that’s it, the lender automatically had such a right, but companies are in no hurry to do this, because they intend to get their own financial benefits from the current situation. In a word, they fully fulfill their commercial purpose, without even going into the details of your financial situation. This is the structure of this business.

For about a month or two, you don’t have to wait for a court summons - the MFO uses this time to increase the amount of debt, because from the first day of delay, in addition to the interest on the contract and the fine, other charges, the so-called late interest, begin to accrue. Their size is specified in the microloan agreement. The agreement continues to be valid, charges increase, the creditor is in no hurry to sue, taking a wait-and-see approach, and the debtor hopes in vain that he will get away with everything. Remember, neither MFOs nor other credit organizations forgive debts, which means you will have to pay. How much depends on you and the court’s decision, here’s more about that.

Court is salvation for the borrower

They start to threaten the borrower with the court from the day the contract is concluded. Thus, the creditor, while in a mild form, is trying to explain that it is better to pay on time, otherwise the day of the “Last Judgment” will come, which will radically change the debtor’s whole life. If it comes to the collectors - the successors of your debt, the legality of whose activities still remains in doubt, expect severe pressure from them. By the way, they also interpret the trial incorrectly, declaring that you will be taken out of the courtroom in handcuffs and goodbye freedom for about 3-4 years.

No matter how paradoxical it may sound, in reality the court is for the benefit of the borrower, because:

From the moment the company files a claim, the accrual of fines and interest ceases;
The court has the power to revise the amount of the penalty downward.

On the first point, everything is clear - in the claim, the creditor indicates the amount that he demands to be returned forcibly, and accordingly, the “counter” is turned off. The second point should be explained in more detail, because the court does not show leniency in all cases.

When is it possible to reduce the penalty?

The Civil Code of the Russian Federation has article No. 333, which is life-saving for debtors, which allows the court to reduce the penalty that the creditor has calculated, but only if it is incommensurate with the amount of the loan itself. Just don’t confuse a penalty with interest on a loan - the amount of debt and charges made under the agreement remain unchanged.

We are talking about interest on arrears or interest on interest (the so-called compound interest) - they can be reduced, and significantly. The court will certainly take into account the incommensurability of the two amounts, if, for example, you took out a microloan in the amount of 10 thousand rubles, and the claim is for collection of the entire 100 thousand. In this case, the court will be based on the refinancing rate, which is valid for (attention!) the day of filing the claim, and will set the interest equal to 2/3 of the rate (today it is 8.25% per year).

The second point, which will play into the hands of the debtor, is associated with the deliberate delay of the process. During the proceedings, pay the judge's attention to the fact that a lot of time has passed from the moment the first delay occurred until the filing of the claim, and this was done on purpose to artificially increase the amount of the debt. The court will take this argument into account, since this is stated in the Law.

What decision will the court make?

You will not be released from fulfilling contractual obligations. The court may reduce the final amount, thus partially satisfying the claim. In some cases, they may be required to pay part of their wages to write off the debt, or impose a penalty on material assets and property (except for the only housing and some things that are essential items). In rare cases, the court will grant a one-year deferment if you can provide credible arguments about your unfavorable financial situation.

Whatever decision is made, both parties accept it unconditionally. In case of disagreement, you can file an appeal, then go to the court of cassation. If this does not happen, the decision will be transferred to the executive authorities, but even here you can agree with the bailiffs on the gradual repayment of the debt. The only negative is that you will have to cover their costs, but the debt no longer grows, the creditor does not call, and collectors do not bother you.

Declaring yourself bankrupt

The law on financial insolvency (or bankruptcy) is another real way out of the situation. A citizen files a petition to the court to declare himself bankrupt. Next, all your financial affairs will be managed by the manager. Information about wages and compensation will flock to him - the financial side of your life is now in full view. Of course, you will lose your property, but after the bankruptcy procedure is completed, you will remain “clean” before creditors, and you will not need to wait for the bailiffs to arrive. In essence, life begins with a clean slate. Which path to choose is up to you personally.

Example

To prevent the creditor from taking advantage of the opportunity to increase the amount of the penalty by delaying the filing of the claim, the debtor himself can act as a plaintiff. Judicial practice shows that sometimes it is possible not only to restrain the growth of the penalty, but also to recognize the amount of established interest as invalid.

Briefly about the situation: in June 2013, gr. Ivanova took out a microloan in the amount of 10 thousand rubles from the Mayak company. at 2% per day, which is 732% per annum, and was unable to pay off the debt. On the advice of a lawyer, Ivanova herself filed a lawsuit against the company in order to invalidate the terms of the contract. In particular, the plaintiff indicated that the interest and penalties provided for in the agreement were extremely unprofitable for her, because on the day the microloan was issued, the interest rate was 90 times higher than the refinancing rate. Ivanova also indicated that the stated fact is well known, and in accordance with Article 61 of the Code of Civil Procedure of the Russian Federation, her obligations do not include collecting evidence of the existence of extremely unfavorable conditions established in the agreement with the creditor regarding the amount of interest.

The claim was considered by the Kirovsky District Court of Rostov-on-Don. The court granted the claim of gr. Ivanova, recognizing the terms of the transaction as enslaving, guided by a number of articles of the Code of Civil Procedure of the Russian Federation (Articles 194-199, 12th, 56-1, 103rd).

Unfortunately, either due to financial illiteracy, or due to a negligent attitude towards their debt obligations, some clients fall into arrears and naively assume that nothing will happen to them if they do not pay off the microloan. Because of this, a completely reasonable question arises: “Can microfinance organizations sue a debtor?”

It is immediately worth noting that Many of these creditors turn to collection firms when dealing with problem clients.. But this does not mean that they cannot sue. Since MFOs issue small amounts at a time, it is not always advisable to incur legal costs. It is more profitable to resell the debt to collectors and at least somehow compensate for your losses.

When judgment is inevitable

To bring a case to court, the creditor must have compelling reasons. At the first delay in payment, the credit institution automatically has a reason to go to court. However, none of the companies is in a hurry to do this, which is due to the desire to obtain even more benefits for themselves in the current situation. Thus, they fully fulfill their purpose associated with obtaining maximum profits. At the same time, they are not at all interested in the financial situation of their clients. If you want to know specifically which MFOs sue debtors, the list is below:

Webbankir;
Urgent money;
Moneyman;
Zaimer;
Viva Money;
Turboloan.

If the client delays payment within 1-2 months, there will be no subpoenas. This is due to the fact that credit companies try to increase the amount of debt as much as possible. During this period, interest is accrued under the loan agreement and penalties for improper fulfillment by the borrower of its debt obligations. The amount of each of these charges is indicated in the loan agreement.

The client is wrong to think that there will be no consequences if the company does not immediately sue him. In fact, she is simply waiting for the most favorable moment. The essence of all credit institutions is to obtain from borrowers everything that is due, and they will not forgive debts. But the amount you have to pay is determined by a court decision.

What is the court for the borrower?

The debtor begins to be intimidated by this authority already at the stage of signing the contract. The credit organization makes it clear that the best way out is to fully comply with all the requirements of the loan agreement, otherwise the matter will go to court, where everything will become much worse, for example, that the client can be taken in handcuffs straight from the courtroom and sent to prison for 3-4 years. There is also the option of connecting collection companies that buy out debts and do not hesitate to use any means to achieve their payment. By the way, the activities of collection companies, from the point of view of the law, are somewhat questionable.

However, in reality everything is far from the case. In most cases, court is an even better option than alternative means of forcing debt repayment. Litigation is more profitable because from the moment the claim is filed, the accrual of penalties and interest stops. The court also has the power to reduce the amount of the penalty. It happens like this:

The creditor files a lawsuit specifying the amount he wants to recover. At this time, the accrual of any payments stops.
The court considers the claim and determines the actual amount of the penalty.

In what cases is it possible to reduce the payment amount?

The Civil Code of the Russian Federation contains Article No. 333, which is very useful for all debtors. It allows the judge to legally reduce the amount required to be paid if it is too large compared to the funds borrowed. However, the penalty has nothing to do with the interest accrued on the loan amount. All charges corresponding to the concluded agreement remain in force, and the court does not have the right to cancel them.

But the court may well reduce the amount of interest accrued on arrears, or interest accrued on interest (they are also called compound interest). In this case, the incommensurability of the two amounts is taken into account. For example, if 5 thousand rubles were taken out on credit, and 50 thousand are required to be repaid, then the court will be guided by the refinancing rate that is in effect on the day the claim is filed. In this case, a percentage will be set equal to approximately 2/3 of the bet.

Deliberately delaying the trial can also work in the client’s favor. This will allow the judge to draw the attention of the judge during the process to the fact that a lot of time has passed between the first delay and the moment the claim was filed. Moreover, it must be stated that this was done intentionally in order to increase the size of the debt. The court will take this statement into account.

What verdict can the court make?

You should not think that the court will completely release the borrower from fulfilling contractual obligations. He can only reduce the amount required by the credit institution. Debt repayment can be carried out by deduction from wages or by levying a penalty on the debtor’s property or his material assets. Exceptions may include essential items and only housing. Sometimes the court may grant a deferment for a year if the debtor manages to convince the judge of his unfavorable financial situation.

Both parties must accept any decision made by the court unconditionally. If someone does not agree with this, then they can file an appeal and go to the Court of Cassation. If this is not done, then the decision is forwarded to the executive authorities. Sometimes it is also possible to agree with the bailiffs on the gradual payment of the debt. The only drawback is the payment of their costs.

What happens if you declare yourself bankrupt?

Another opportunity to get out of the situation with dignity is to use the law on financial insolvency. To do this, the debtor must file an application with the court to declare himself bankrupt. After this, all his affairs will come under the control of the manager. All information about the financial side of the debtor’s life will flow to him. This will lead to the fact that the debtor will lose his property, but will remain completely clean in the face of creditors. This will allow you to start life from scratch.

Do microloans go to court if the client makes contact?

There are often times when there is simply no money to pay the bills. However, this is not a reason to hide from the lender. MFOs are quite loyal in terms of deferred payments. The client can present weighty arguments in his defense and ask for an extension of the loan period.

There is a fee for renewal. Its size is set individually. However, it is much more profitable to pay a commission for extending the loan term than to lose a good name in the financial environment. Many microfinance companies actively cooperate with BKI and transfer information about their clients there. Legal proceedings are also reflected in the borrower’s credit history, and these are very compelling reasons for refusal on subsequent applications to other banks and microfinance organizations, rather than minor delays.

You shouldn’t think about whether microfinance organizations go to court. You need to realistically assess your own strengths before falling into debt bondage. You shouldn’t believe colorful advertisements and randomly take out loans one after another. You will have to pay the bills sooner or later anyway.

Commercial banks always solve the problem of non-payment of debtors in one way - through the courts. This practice among large financial organizations is quite justified, given the staff of lawyers, extensive experience in this matter, and even a special fund that regulates the percentage of legal costs. But microfinance companies, as a rule, are small players in the lending market, and they solve their problems with debtors in other ways, because they have less leverage than structures supported by the Central Bank.

Do MFOs sue debtors to compensate for their expenses and losses in case of non-payment of debt or interest? Legal statistics in recent years show that small companies rarely resort to such measures, since such steps are not profitable for them from a financial point of view. To prevent their risks, MFOs primarily use “white” and “black” lists of persistent defaulters, which they exchange among themselves and receive from commercial banks. But this does not save any microfinance organization from non-payment of debts.

How does an MFO collect an overdue loan?

When a lender with the status of a microfinance organization encounters a client who completely or partially ignores the obligations to repay the debt in accordance with contractual agreements, he resorts to the following measures of influence on debtors:

Regularly calls its borrowers with demands to repay the overdue debt and interest on it;
Assigns penalties for late payments;
Threaten to denigrate the debtor’s credit history and place him on the list of defaulters (black list) used by many banks;
If the client ignores these measures, the MFO goes to court to defend its interests;
If you don’t want to bother with the courts and incur costs, you sell the debt to a collection agency, which practices debt collection through the courts, having its own staff of trained lawyers.

Outside of court proceedings, the debtor may be charged with inflated amounts of debt on interest, allegedly pressing him with the fact that he has “increased” penalties and needs to pay more penalty interest. Collectors help to put moral and psychological pressure on a negligent client to repay the debt. But more and more often it happens that the borrower himself sues the MFO, who does not want to fight with collectors, and considers the amount of interest that has increased several times to be unreasonably inflated.

On the other hand, it would be unfair to say that an MFO client with an overdue debt may not be afraid of a subpoena. Indeed, according to statistics over the past year, MFOs themselves have increasingly filed lawsuits in order to get their money back. But in addition to this, collection organizations have also learned to competently resolve such legal issues, which, as a result, also threatens the borrower with a corresponding court decision and enforcement proceedings.

In what cases do microfinance organizations solve the debt problem in court?

Based on the above, it can be argued that the debtor will have to repay the debt. Sooner or later, the company will be forced to address this problem, and in what ways is another question.

As practice shows, microfinance organizations do not file a lawsuit with a claim against the borrower for the following reasons:

Due to possible difficulties and increased costs due to the lack of legal support in the region where the borrower lives;
In the case of a small debt balance, for example, when the principal has been repaid and the claim is only for interest or penalties;
When the debtor has no property and no legal income, as a result of which winning the court will not be beneficial for the MFO, since repayment of the debt and interest will most likely remain hopeless.

But, even despite these common cases when financial organizations do not sue, you should not assume just on the basis of a similar situation that a statement of claim will not follow. Within the framework of a single microfinance organization, collection can be carried out in different ways, and you should expect a subpoena from the court under the following circumstances of the case:

A microcredit agreement has the form of a pledge, when the guarantee is any property (movable/immovable) that has value and belongs to the debtor.
If the amount of debt is small, no more than 50 thousand rubles. An MFO may deliberately delay submitting documents to the court so that the amount increases due to an increase in penalty interest.
With a large loan amount of more than 500 thousand rubles, the MFO risks being left without payment of both principal and interest, since the debtor has the opportunity.
If the borrower completely ignores the debt and does not make any payments.
In the case where the MFO knows that the debtor owns valuable property that can be seized in favor of the debt.
If the microfinance organization sold the debt to a collection agency, whose practice provides for legal proceedings to deal with debtors;

Without paying off the debts of an MFO, you should remember that according to statistics, not a single credit organization, without good reason, forgets about the debt obligations of clients and does not forgive them. What should a borrower do if, according to the loan agreement, late payments are registered? First of all, you need to figure out what the consequences of non-payment are and how you can solve the problem peacefully. In such cases, professional legal advice can help ().

How long does it take for an MFI to file a lawsuit?

The type of loan plays a decisive role in the issue when an organization files an application to court against a borrower. First of all, you can expect the fastest possible subpoena if the loan is issued on the security of property. Today, financial companies often and quite actively profile these types of loans in order to minimize their risks as much as possible. In order to understand which microfinance organizations sue debtors, it is enough to find out what types of loans they offer. In cases of secured loans, the issue is usually resolved quickly, and far from in favor of the debtor.

The situation is a little more complicated with debt on a cash loan, without collateral. To begin with, the MFO will try to return the money using the main methods of moral and psychological influence. If such measures do not affect the debtor in any way, and even the slightest deductions do not begin to flow into the organization’s account, the MFO will most likely decide to file a claim regarding the debt in court. Most often, companies wait for 90 days, because this is the period that gives the debt the status of “bad”.

When the court is not beneficial for an MFO

MFOs understand that if the debtor is forced to defend their interests in court, any tricks will be used to reduce some of the interest, challenge fines for non-payment in whole or in part, or even invalidate the loan agreement if an experienced lawyer identifies violations in its drafting. As a rule, the court decision in such cases is more in line with the interests of the debtor, because during the legal proceedings the amount of payments is often revised and most of the interest is reduced.

As the Ministry of Finance comments on the unfavorable position of many credit companies, the legislation has now adopted a number of amendments that allow debtors to repay debts on less stringent terms.

“...According to the new legislation, from January 1, 2017, each microfinance organization will be able to demand reimbursement of debt in the amount of no more than 300% of the original loan, including the amount of accrued interest, fines and penalties.” Thus, the Ministry of Finance reduced the ability of microfinance organizations to somehow regulate the process of debt collection in such organizations, since until this time companies could impose any fine, as long as it was specified in the contract. In such cases, the amount of penalties on loans often reached from 500% to 800%.

At the same time, the MFO risks not receiving its money even if the court decision directly states this. After all, even in the case when the debtor is obliged to pay everything that is due, according to the decree, this is not a guarantee that he will actually return everything. Until the bailiffs take care of the debtor, he may not have any property that, according to the law, can be seized and sold for the benefit of the debt. Moreover, the debtor may not have a job or other official income. If the bailiffs do not find a way to resolve the disputed issue, after a certain time the enforcement proceedings will end and the plaintiff will not be able to demand a refund. Why is this possible?

There is such a thing as the expiration of the statute of limitations. This is when, after 3 years have passed from the moment the creditor applied to the court with a demand for the return of funds, the debt is recognized as having expired due to the impossibility of its forced withdrawal. However, the work of MFOs is organized in such a way as to prevent such a scenario from happening as much as possible. Although in practice such situations also happen.