Debt Collection in Russia

The Russian debt collection process suggests recovering outstanding sums of money from unpaid bills and contracts which have not been honored. Who can impose debt recovery in Russia on individuals and companies?

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There is no particular law delivering for the grounds of the debt collection in Russia. However, these proceedings are covered by Civil Law and several banking regulations. Any entrepreneur or a private company can be an obligation collector in Russia. Because in most countries, special rules regarding the debt collection procedures apply, foreign debt recovery agencies are more successful than the local agencies. You can rely on our law firm in Russia for service in debt collection practices.

Legislation on debt accumulation in Russia

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If there is no particular or better said specific law to deliver on how to collect a debt, the Code of Civil Procedure and the Arbitration Code contain requirements to deal with financial disputes. While the Civil Code can be employed when dealing with court actions against a debtor who can be a legal entity or natural person, the Arbitration Code is generally used when dealing with debt recovery procedures between companies.

Most Russian companies dealing with corporate clients unable or unwilling to pay their debts can consider arbitration and mediation to extinguish their disputes. The Supreme Arbitration Court handles cases that can try through arbitration in Russia.

If they can reach no agreement, a general court will try the case, and a bailiff will complete the enforcement of the court order.

Our law firm in Russia can help you avoid lengthy and expensive debt collection procedures in court by reaching an amicable agreement with the debtor.

Debt collection agencies in Russia

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

Who may recover the debts 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 debt collection agency’s market can be divided according to different criteria: the coverage area, the type of debtor, technique, and ways of work.

Our law firm in Russia can assist in debt collection recovery procedures.

Stages of debt recovery procedures in Russia

There are two stages of the debt collection procedure in Russia. The first one is the out-of-court or pleasant procedure, and the court proceedings represent the second one. It is important to note that if the friendly process is successful and the creditor and debtor reach an agreement, there will be no need for other additional steps. However, if the amicable procedure fails, the next step is for the creditor to file a petition with a Russian court.

Those who need more input on how to avoid lengthy debt collection procedures can ask for the support of our Russian law firm.

Problems for debtors in Russia

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

The relationship between the creditor and the debtor is not necessary 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 persuading him to pay the debts. Usually, this works because of the high pressure of being called by the collector. If this doesn’t work, hire a collection agency to contact the debtor.

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

It’s essential for the economy for companies to be solvent and pay their debts. If not, the creditor may not produce its debts, creating a vicious circle.

Our Russian lawyers can offer more information on the different types of debt collection procedures.

Types of debt collection procedures in Russia

Who can complete the debt recovery process in Russia amicably or in the court of law? While the amicable procedure is short and implies reaching an agreement with the debtor, the court proceedings are lengthier and mean issuing a court order.

who will take the following steps to recover a debt in Russia:

  1. the first step is bringing to the knowledge of the debtor the fact that they have unpaid amounts of money;
  2. if the debtor fails to reply, who will send notifications through which they will be asked to pay via email or direct mail;
  3. in case the debtor continues without replying, the claimant can file a petition with the Russian court;
  4. once the case is accepted, the claimant must submit all the evidence showing the defendant failed to pay the debt;
  5. The court will analyze the evidence and issue the court order, which will enforce the debt payment.

If you need help in recovering a debt, our litigation attorneys in Russia are at your disposal.

Amicable debt collection in Russia

Russian companies dealing with debtors will usually try to recover any amount of money through amicable procedures. They can try to reach an agreement with the debtor on their own; however, in most circumstances, the assistance of a debt collection agency or law firm is requested. This usually happens because the procedures are expedited, and it is easier to pay the debt.

During the amicable debt recovery procedures, the creditor will try to contact the debtor several times before running the request to a Russian court. It can get a debtor by phone, email, and postal services. It is important to note that evidence of such contact attempts must document and keep as evidence in case a litigation procedure is commenced.

Returning to the out-of-court debt collection, the creditor has the right to assess the debtor’s financial condition and cause of debt based on which a good agreement for both parties can be reached.

You can direct your questions to our Russian attorneys for complete information on the amicable debt collection procedure.

Documents to be filed in court debt collection in Russia

When involving with a Russian court to recover a debt, who must file the following documents:

  • the manes of the players in the dispute;
  • information on the circumstances related to the case;
  • evidence about the topic (contracts, payment failure notices, etc.);
  • information about the amount of money to be recovered.

Our Russian lawyers can help you design the file to be submitted when claiming a debt recovery in court.

Assistance in collecting debts in Russia

Our Russian law firm offers assistance in debt collection matters, among which:

  • our services are unrestricted for both individuals and companies seeking to recover debts;
  • we can also help companies in commercial disputes related to the collection of debts;
  • we can offer support in the amicable recovery of a debt in Russia;
  • we can provide representation in the court of law in case of judicial procedures related to debt recovery.

The new Bankruptcy Law in Russia

To protect debtors from collectors violating the legal boundaries of debt recovery, the Government passed new legislation under which natural persons can file a petition with a Russian general jurisdiction court and have their claims heard. The patient will be presented before the Arbitration Court in Russia for entrepreneurs.

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

Protection of debtors in Russia

In 2017, a new law came into effect: Federal Law No. 230 – FL, which protects the rights and interests of physical persons by debt collection agencies seeking to retrieve overdue amounts of money.

The new law does not provide for the debt collection procedures but for the companies engaging in activities that chase debts from Russian citizens and residents. The new law allows such companies to respect the debtor by contacting them no more than two times per week. Also, a meeting once per week during the day is imposed.

Debt collection agencies are no longer allowed to use no-caller ID numbers when calling clients. Also, the Federal Bailiffs Service will handle any debt collection procedure.

The Federal Bailiffs Service is also in charge of keeping a register of all debt collection agencies in Russia.

According to the Registrar kept by the Service of Bailiffs:

  • in December 2016, there were only 414 legitimate debt collection agencies in Russia;
  • out of these, only 66 had as their primary activity debt collection;
  • 29% of all agencies are located in Moscow, while 11% are located in Saint Petersburg;
  • at the level of 2021, around 890 active organizations were operating as debt collection agencies in Russia.

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

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