“I will sell the debt of an individual according to the writ of execution,” such announcements began to appear more and more often on various debt exchanges and auctions. The crisis in the Russian economy has led many citizens to no longer give loans. People lose their jobs, there are various optimizations at enterprises that lead to lower wages, firms begin to experience difficulties with liquidity, etc. - all this leads to bank delays. And then there are events that can be conditionally characterized by one phrase: “snowball” - fines, penalties, interest on interest, penalties for non-payment of interest for interest, etc. appear. In other words, the debtor falls into bondage, from which he cannot then get out.
A similar situation is not uncommon in our economy. Banks have accumulated so many debts that they themselves do not know what to do with them. Here the phrase is appropriate - “you can’t be pardoned”, in which credit organizations themselves do not know where it is better to put a comma. The solution lies in the assignment of rights of claim for the minimum cost that new lenders are willing to give. Is it possible to sell a debt of an individual? We will answer this question in our article.
The concept of cession
What if the bank sold the debt to an individual? Does he have a right to this? Actually yes, it does. This happens all in the framework of Russian law, in which there is such a thing as an assignment agreement. We give a definition.
A cession agreement (cession) is an assignment of rights to claim a loan or other type of debt agreement from one creditor to another.
The original creditor is called the assignor, and the new one is called the assignee. The Bank has the right to sell the debt of an individual not only to another credit institution, but also to any individual. Some citizens even managed to redeem their liabilities from banks through dummies for an amount that was ten times less than debt.
Limitations
To sell a debt of an individual under a cession agreement, the consent of the debtor is not required. Therefore, the phrases: “I did not know”, “I do not agree”, “do not have the right” are absolutely useless. However, there are restrictions that prohibit original lenders from transferring claims: if the loan agreement expressly states that such actions cannot be performed. Since 2017, the law has been in force with respect to collectors: banks cannot be sold debt to them if there is no direct consent in the loan agreement. If there is no direct prohibition, then by default it is considered that the right to claim can be transferred (an exception is for collection agencies).
It does not matter that the debtor regularly pays the entire amount due on time and in full. In this case, a credit institution may transfer its right of claim to another person, for example, in the event of bankruptcy approaching.
How to sell a debt of an individual on receipt? More on this in the next paragraph.
Receipt debt
A receipt is the simplest form of a loan agreement concluded, as a rule, between two individuals. The more detailed information there is in it, the more chances there are to recover a debt in a judicial proceeding. It is also possible to sell a debt of an individual by receipt within the framework of the current civil legislation by concluding an appropriate assignment agreement.
Collectors and intermediaries are wary of such debts, since there are great risks of default on them. The most attractive for them are the following receipts:
- notarized;
- with details of the borrower and lender;
- the presence of witnesses with all the data about them.
Prices
You can legally sell a debt to an individual, however it is still better for a creditor to try to recover the amount due from the debtor. The fact is that prices on exchanges and auctions are very low for the transfer of rights to claims. During the crisis, they fell even more, as the debt market is oversaturated. Credit organizations sell entire portfolios of multi-million debt for 0.1-1% of their value. In rare cases, the price reaches 10-15%. On exchanges individually, you can negotiate conditions up to 50%, and sometimes up to 80% of the debt amount. It depends on the prospect of recovery, and it is very problematic to sell a debt of an individual concluded orally, as it will be difficult to prove such a transaction in a court.
Cost factors
The cost of selling or acquiring debt depends on the following factors:
- Status in society. The higher a person occupies a post, the more chances are that a debt can be demanded from him. The debts of famous showmen, actors, politicians and others are especially popular with collectors. Using them, you can cause a public outcry by creating effective advertising for a collection agency.
- The solvency of the borrower.
- Amounts due.
- The presence or absence of a writ of execution.
- Credit collateral.
- The presence of other loans.
- The possibility of declaring oneself bankrupt, etc.
Selling debt to collectors
Before you place an ad somewhere with the words “I will sell the debt of an individual to collectors”, you must prepare the relevant documents. The main rule on exchanges and stocks - the more written evidence and information about the borrower, the better.
At the first stage, the future assignee is provided with all the documents for the analysis of authenticity and possible risks. This usually takes from a few days to several months. After that, the collectors voice their price.
It is important to know that the obligation to notify the debtor before the transfer of rights lies with the original creditor.
Executive Debt
If there are announcements on exchanges with the phrase “I will sell the debt of an individual under the writ of execution”, this does not yet guarantee that the debt will be repaid. The only plus from the writ of execution is that authentication of documents is not required. Everything else, on the contrary, is a minus. The fact is that debt collection under the writ of execution is the last effective legal stage of influence. After it, it is almost impossible to return the amount due under the law. The effectiveness of bailiffs leaves much to be desired, since up to one thousand cases on enforcement proceedings per employee. Therefore, debts on them at auctions and exchanges have the lowest price tag.
New collector law
In 2017, the new Federal Law on Collecting Activities came into force. It applies only to individuals, and does not apply to debts of legal entities, as well as debts for utilities.
The new law says that banks have the right to assign the right to demand only to collection agencies that are licensed. This measure was forced, as a wave of public anti-collector movement swept through the country, associated with the illegal actions of agencies. The state put forward a number of serious requirements for obtaining a license, and introduced serious fines for working without it. However, this does not mean that only collection agencies have the right to redeem debts from banks. Any individual can buy past due debts.
Subtleties and risks of the assignment agreement
Do not forget that the transfer of rights of claim for debt carries risks, especially for buyers - assignees. Some debtors know loopholes in the legislation that they use for their own purposes.
When concluding the assignment agreement, the original creditor must notify the debtor that a new transaction has taken place and that he must now repay the debt to another person. However, many collection agencies buy debt in a single multi-million dollar portfolio. Often, the assigning bank does not bother sending out registered letters to debtors who did not fulfill their obligations to it. The price of such assets is usually 1-2%. The bank needs to free itself from illiquid assets, and collectors - to earn. Complying with legislation and informing everyone is expensive, and agencies rely on the legal illiteracy of the population. If one out of a hundred debtors pays, then his activity will already be profitable.
It is important to know that the debtor has the right not to pay money to the new lender before the latter has provided evidence of the assignment agreement. If the amount of debt is small (20-50 thousand rubles), then you can be sure that collectors will not collect debts in court, since such processes cost them more than the amount of the gain.