credit card

The amount of bad overdue debts of Russians on credit cards exceeded 100 billion rubles. This is the largest increase among all consumer lending segments. Izvestia found out what delay the banks consider to be hopeless, is it possible not to pay off the “card” debt and how the situation will affect the consumer lending market.

Exceeded one hundred

The volume of “hopeless” delinquency on credit cards of Russians has grown to 108.7 billion rubles. Bad debts are debts that have not been paid for more than 360 days. As follows from the data of the credit bureau Equifax and the National Association of Professional Collection Agencies (NAPKA), the volume of such debt increased by 19.6% over the year.

So, by data BKI “Equifax”, as of the beginning of September, problematic (that is, not serviced for 90 days or more) was every tenth loan issued by the bank to an individual.

At the beginning of October, the amount of overdue debt had already reached 970 billion rubles – an absolute record. Since the beginning of the year, it has increased by 9.2%. 60% of all overdue debt falls on cash loans, 37% – credit cards, 1.5% – car loans and 0.5% – on mortgages. However, of all categories of loans, credit card debt showed the largest increase. Card issuance volumes are growing amid economic recovery, but household incomes have declined, affecting the ability to service debts.

Photo: Izvestia / Alexey Maishev

Complex product

For the whole of 2020, banks issued a record number of cards in seven years, reaching 200 million active credit cards. The trend continued this year. According to Equifax, the volume of loans issued by credit cards for seven months of 2021 amounted to 475.4 billion rubles. This is 48.7% more compared to the same period in 2020. At the same time, the number of issued credit cards increased by 19% – up to 6.7 million units.

Despite their seeming simplicity, credit cards are a complex product that borrowers often do not understand due to a lack of financial literacy, says Marina Abramova, head of business development at Dyna Pay. Not everyone is aware of the conditions for using the grace period, they know how to calculate the monthly payment. At the same time, many Russian banks do not have the most perfect and visual ways of presenting this information to borrowers. The expert also sees a problem in the fact that due to the pandemic it has become even more difficult to convey information to borrowers, since customers more and more often ordered cards online.

Write off but not forgive

Any debt for which the payment deadline has been violated, starting from the next after the due date of payment, is considered overdue, but this does not mean that banks immediately go to court.

“Due to the fact that the lawsuits are quite extended in time and, moreover, they require payment of state fees (that is, additional investments from the bank), banks first try to collect overdue debts in a pre-trial manner.“, – says Mikhail Payushin, Managing Partner of Freeviser Law Firm.


Photo: RIA Novosti / Natalia Seliverstova

The bank has the right to apply to the court to recover the debt from the client if it is overdue for more than three months. However, collectors are not immediately transferred to collect debt: it is not very profitable for banks to sell loan portfolios up to 365 days in arrears, since they will have to create additional reserves. A large volume of overdue debts to banks is useless, and for the reason that it can worsen the credit rating of the organization.

As Abramova emphasizes, in many cases, external collection agencies work from the early stages of delay. And therefore, the technical “write-off” from the balance sheet is a formal procedure, for the borrower it does not change anything – either the bank or the collectors will have to pay.

For banks, debt relief can be a good tool for freeing up illiquid capital.

«Few people know that when overdue debts are formed, the bank must fund (freeze) part of the funds according to the requirements of the Central Bank – and this is from 60% to 300%, depending on the period of the overdue debt. Thus, even the bankruptcy of a client can be positively perceived by the bank, since the debt will be written off and frozen liquidity will be released.“, – says Grigory Pakhomov, financial expert at KPK Capital of Regions.

An overdue card loan cannot be repaid. Banks usually take steps to collect such debt – including through the courts. As a rule, then credit organizations cede their rights of claim to third parties, including professional collection agencies, emphasizes Aleksandr Kulinich, head of the problem loans service at Renaissance Credit Bank.


Photo: Izvestia / Alexander Kazakov

Bankrupt and glad

According to the law, the delay of more than three months and the amount of debt exceeding 500 thousand rubles, make it possible for the bank to apply for declaring a citizen bankrupt.

“If the citizen is declared bankrupt, the debt of the citizen to the bank is recognized as hopeless. Therefore, banks themselves often apply for bankruptcy of individuals themselves, so that this would serve as a legal basis for writing off bad debts, ”says Roman Chernyshov, senior lawyer at the law firm YUKO.

Another thing is that only bona fide borrowers – those who have attempted to settle accounts with creditors – can count on being declared bankrupt. The procedure also has obvious disadvantages. It is quite lengthy and expensive, it can cost 150-200 thousand rubles. In addition, with a high probability it will lead to the sale of the debtor’s property.

Experts state that the lending market is overheated, but it is not expected to cool in the medium term. The demand for loans in the country is growing steadily, and the growth of consumer activity implies an increasing use of credit funds.

Not black

Thus, experts recommend that you carefully study the terms of loan products, assess your own solvency and the existing debt burden. And in any case, do not go to illegal providers of financial services – the so-called black creditors.

These are financial companies that do not have a license from the Bank of Russia, but give loans to everyone. To obtain a loan, as a rule, even a personal presence is not required. The flip side of this “simplicity” is frantic interest rates and tough, often criminal methods of collecting overdue debts.

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