From July 1, the order of payments on overdue consumer loans will be established
On July 1, 2024, a law will come into force that changes the procedure for repaying a borrower’s debt on a consumer loan if the amount of his payment is insufficient to fully fulfill his obligations. We are talking about changing the procedure for collecting payments on overdue debts of borrowers. It is expected that the new procedure will be more beneficial to individuals – bank clients, since they have a chance to reduce accruing debt. According to preliminary data, the innovation may affect over 20 million Russians – in fact, every seventh resident of the country.
According to the law that comes into force on the first day of July, the previous procedure for repaying debts in the first and second stages interest and principal will be saved. Previously, after this, payment of penalties, fines and penalties was taken into account, then interest for the current payment period and the amount of the principal debt for the current payment period were repaid.
Now, in the third place, interest accrued for the current payment period will be repaid, then – the amount of the principal debt for the current payment period, and only then penalties, fines and penalties. The law states that the order of debt repayment cannot be changed by the parties to the consumer loan agreement.
The question of the procedure for repaying debts in our country – not at all small and not private. The thing is. That, according to data from the Federal Bailiff Service (FSSP), announced at the end of last year, more than 21 million Russians became loan defaulters. By the end of 2023, the figure jumped by almost a quarter compared to the same period in 2022, and the total amount of collections came close to 3 trillion rubles. In total, now in Russia, according to the Central Bank, 47 million people have loans.
Details of the July legislative innovation and its possible impact on the credit market, «MK» asked experts to comment – lawyers and financiers.
Mark Goikhman, analyst at the Capital Skills Financial Academy:
«The innovation greatly simplifies the situation for borrowers. In the order of debt repayment, the “third priority” changes. But first of all, this will be a big plus for many bank clients.
Yes, debts are also “standing in line.” If there was a delay earlier, after paying off the previous debt on interest and principal, the bank took the money to pay penalties, penalties, and fines. And only then could the current monthly payments be paid off. But if the borrower did not have enough funds, it often did not reach the point of closing these current debts – “ate” everything penalties and other sanctions. And then new debts increased, became overdue, and penalties again piled on top of them, like a snowball. To overcome such an “eternal” the debt was often very difficult, repayments seemed to go “nowhere”, the current debt did not decrease.
And now they have “moved the queue forward”. Monthly payments will be paid off before all penalties and fines. In many cases, this will help to overcome the “eternal” flow of penalties and ease the situation for borrowers.
But the number of consumer loans overdue for over 90 days was 6.87 million, worth over 1 trillion rubles, according to the Scoring Bureau as of April 30, 2024. This is the army of borrowers for whom this innovation is important.”
Polina Gusyatnikova, Senior Managing Partner of the law firm PG Partners:
“This is a very good innovation for borrowers, because a person who is trying to pay something off under the current payment scheme is often faced with the fact that penalties and fines will cover any of his attempts to repay the principal amount of the debt. Thus, the debt will grow like a snowball, putting the person in a position where he has no choice but to file for bankruptcy. Such a scheme is not beneficial to anyone: neither the banks, which in the end may not receive anything at all if the amount of penalties and fines is unaffordable for a person, nor the borrower, who is essentially deprived of the opportunity to somehow get out of the situation. Therefore, the fact that penalties and fines can be paid off after the amount of the principal debt – this is a very correct decision, allowing the borrower to gradually reduce the “body” of the loan. loan. His debts will not grow indefinitely, but will begin to gradually decrease, even if payments are not made on time.”
Natalia Milchakova, leading analyst at Freedom Finance Global:
“The law will affect bank borrowers, although not all, but only those who are overdue on servicing a consumer loan. First of all, it is aimed at reducing “bad debts” and preventing bank losses, as well as to facilitate the conditions for fulfilling obligations for borrowers who, due to certain circumstances, are in arrears on a consumer loan. Now the borrower can pay fines, penalties and other penalties after he has paid off the previous outstanding debt and then paid the current interest. In our opinion, such a change in the procedure for repaying debt and paying fines will be beneficial for both borrowers and the banks themselves, since the borrower will have time to, for example, find an opportunity to earn additional income to pay fines for late payments. In principle, this law will allow for greater consideration of borrower rights than is currently the case, although it would be important for such innovations to apply to as many borrowers as possible.”