Putin approved a new procedure for repaying payments on consumer loans
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Russian President Vladimir Putin signed law on changing the order of repayment of loan payments if the borrower has insufficient funds. The document will come into force on July 1, 2024 and will apply to legal relations that arose from contracts concluded after this date.
According to the current rules, bank clients must first pay off fines and penalties, then interest for the current payment period, and then the amount of the principal debt. However, as the government indicated when introducing the law to the State Duma, after paying penalties, Russians have no funds left to repay the principal debt, and the debt is not liquidated.
Now, first of all, the borrower will be obliged to repay the debt on interest, then – the debt on the principal debt and interest for the current payment period, and finally – the amount of the principal debt, penalties and other payments.
The law also gives the lender the right to require the borrower to insure his account against the risks of loss and damage to the pledged property in an amount that does not exceed the amount of the claim secured by the pledge. At the same time, the borrower retains the right to either agree or refuse this service. In addition, the lender will have the right to decide to increase the interest rate on the loan issued if the borrower does not fulfill his insurance obligations for more than a month, but this condition must be specified in the contract.
As of September 2023, the total amount of overdue debt on retail loans exceeds 1 trillion rubles. The Federal Bailiff Service reported that the amount of debt owed by Russians to banks, which is subject to collection, reaches almost 3 trillion rubles. The number of enforcement proceedings since the beginning of the year compared to 2022 has increased by 22%.
Read more in the Kommersant FM article. “Fines are postponed until later”.
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