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The consequences of the economic crisis can be earned. The so-called “collectors” are well aware of this (from the English collection – collection). They come to the aid of those creditors who have not been able to collect debt on their own.
If “black” or “gray” debt collectors have always existed in our country, then specialized collection agencies are a new phenomenon for Moldova. “Fresh” debts are cheaper
In the violent 90s, the methods of “collectors-brothers” were rude. There was no question of a civilized return of money. Instead of collecting the debt, the debt was knocked out, most often in the literal sense, by the method of physical pressure. In some places, some people still solve the problem of non-payment of debts by previous methods, but in general the situation has changed.
Nowadays law firms often offer help in collecting debts. At the same time, many incorrectly call themselves collectors, because the essence of collection is the desire to collect a debt or even buy it without going to court. At the same time, agencies usually help the client achieve debt repayment at all stages, including enforcement proceedings.
Real collection agencies in Moldova can be counted on the fingers of one hand. It is noteworthy that the main market players are not “local bottling” products, but regional representative offices of large foreign collection companies. They appeared in Moldova quite recently – two or three years ago. The market for such services was formed in the developed countries of the West about 30 years ago, and, for example, in Russia – only by 2004. In Moldova, the development of this type of business was predetermined by the crisis and an increase in consumer lending. Nevertheless, according to the director of the Global Credit Solutions debt agency, Sergey Baragan, the small Moldovan debt market is not of great interest to large investors.
“Moldova has its own specifics,” says Sergey Baragan. – Firstly, the development of consumer lending has slowed down with the onset of the economic crisis. Secondly, debt collection is complicated by the territorial fragmentation and the presence of many citizens of dual citizenship. There are difficulties with Transnistria. Thirdly, Moldova has a very high level of migration.
The range of potential clients of Moldovan collection companies is wide, however, each debt agency usually specializes in certain types of debt obligations. For Incaso, for example, these are small debts. The director of the agency, Vyacheslav Myrza, spoke about the company’s ability to collect debts even in 50 lei. Most often, we are talking about mass debts when a company takes into operation a lot of single outstanding obligations of a client, combined into the so-called “portfolio of receivables”.
– Most often, microfinance companies, banks resort to our services. One of our customers is a mobile operator. We even serve libraries, ”says Vyacheslav Myrza. – Among the clients there are also the so-called “communal services”, however, they still do not include one of the main creditors of the population – Termocom.
Sergei Baragan noted that most utility providers have not yet realized the benefits of contacting collectors.
– Many of us are familiar with their work: employees of service providers come to visit our homes. They are unprofessional in collecting debt, their methods are old and ineffective, ”says Sergey Baragan. – Staff, as a rule, are poorly motivated, while employees of collection agencies receive commissions from each debt collected.
Not all banking institutions turn to the services of collectors. The fact is that banks have their own debt collection services. According to Sergei Baragan, their activities are also not effective enough.
– Some banks have invested heavily in the technical equipment of call centers of debt collection departments. However, as in the situation with utility providers, the staff does not undergo special training and works on a fixed salary. In addition, banks have a strong lobby for legal departments that aim to recover debts through the courts, says Baragan.
Meanwhile, the essence of collection is the desire to collect the debts of the client before the court. To the advantages of this method, collectors include the fact that both the creditor and the debtor bear incomparably lower costs.
“Judge for yourselves, the agency does not accept prepayment,” says the director of Incaso. – Only a positive result for the client brings the collector a percentage of the debt. In the case of going to court, the creditor, firstly, loses time, and secondly, he risks not returning the amount of state duty and court costs. The pre-trial collection efficiency is about 70%. So, when it comes to the debt portfolio, the client sues only a part of the debtors. The collector can represent the interests of the debtor both in court and at the stage of execution of the court decision, but only pre-trial settlement of the dispute minimizes the negative consequences for both parties.
A professional collector is, in fact, a pick. In certain cases, he obtains from the creditor the non-inclusion of interest and penalty in the receivable, draws up a schedule for its repayment. If you let the creditor through the rollers of the judicial system, he will have to pay court costs and expenses for judicial execution, moreover, the smaller the amount of the claim, the more offensive the defendant. The “older” the debt and the less it is – the higher the percentage the collector will take. Collector fees vary from 15 to 40%.
Usually, agencies advise lenders not to delay the transfer of debts to them. Vyacheslav Myrza believes that the work of the collector is most effective when the debt is overdue for no more than 90 days. This period is quite enough for independent attempts to recover.
Problems as a commodity
A separate type of collection services is the purchase of debts, which is drawn up by a contract for the transfer of claims (cession – approx. Ed.). In Moldova, it is provided only by Incaso agency.
“A lot of people are ready to sell their debts,” says Vyacheslav Myrza. – However, not everyone is ready to give them up at our price. On average, we charge 40-50% of the amount of the main debt when it comes to the debt portfolio. It is necessary to realize that together with the debts the collector also buys the risk that some of them will not be able to be returned. The client immediately puts the money into circulation, and the difference between the amount received and the full value of the debt is written off as a loss.
Sergiy Baragan believes that the cession institution in Moldova is not developed due to the fact that economic agents, primarily banks, do not have large portfolios of receivables due to insufficiently developed consumer lending. The interlocutor gave an example when, in 2009, a large collection company in Ukraine bought a portfolio of 980 million hryvnias for only 3 million hryvnias, while the deadline for repaying the “youngest” debt was no later than 2006.
Another Moldovan feature is the abundance of fraudulent schemes. Many debtors do not intentionally repay debts. They borrow 20-30 thousand dollars, for example, in Dubai, and live in a big way in their homeland. Feeling impunity, they relax, and then the collector comes “according to their soul”. Some debt agencies specialize in investigating such cases.
The methods of work of collectors are sometimes severely criticized. It is not very pleasant to listen to the demands of an unknown person on the telephone, which seems to be some strange word. Add here the service of including a deadbeat on a special “black list”, and you will understand that creating an atmosphere of discomfort, a negative image in the person of partners and escalating the situation around the debtor is one of the main methods of work of debt agencies. Moreover, their enemy is not a debtor at all, but “black collectors”, creating a negative image for this business. An ignorant debtor in certain circles of a citizen and a persistent former employee of the Ministry of Internal Affairs may erroneously be ranked as a collector.
– There is no law that would establish a framework for the behavior of the collector. However, it is not necessary. Real collectors comply with the law and decency, ”says Vyacheslav Myrza. – We work according to the standard procedure – we send letters, SMS-messages to the debtor, we call him. You need to understand: when taking a debt, the debtor accepts the risk of discomfort in case of delay in returning it. Our task is to talk about the legal consequences of non-payment of debt, because collectors, in fact, work in the interests of not only the creditor, but also the debtor.