What Ukrainians Need to Know: When Banks Transfer Debts to Collectors and How to Protect Your Rights
In today’s financial landscape, many Ukrainians face the challenge of unpaid bank loans, which can have severe consequences for their credit history and future borrowing opportunities. A crucial aspect of this issue is the transfer of debts to collection agencies — a process that occurs under certain circumstances, and awareness of your rights and obligations is essential. According to lawyers from the «Bachinsky and Partners» law firm, a bank can officially transfer a debt to collectors only if proper notification and confirmation are provided. To verify the legitimacy of a collection company's operations, consumers should check their registration details in the National Bank of Ukraine’s registry. It is also important to note that if there is no official notice about the debt transfer, borrowers have the right to challenge the actions of collectors and defend their interests by documenting all contacts — phone calls, messages, correspondence. Legal advice can help if collectors engage in illegal activities or violate rights. But what exactly is a problematic loan? Experts explain that a loan becomes problematic when the borrower systematically fails to repay it — missing payments, delaying installments, or completely ceasing payments. This leads to financial losses for the bank, prompting it to take measures from warnings to legal actions, which can include selling the borrower’s property at auction to cover damages. Before contacting collectors, the bank is obligated to inform the borrower of the breach of contract and attempt to resolve the issue amicably. If the borrower ignores this communication—for example, by changing contact details or deliberately avoiding notice—the situation escalates. The bank may then file a lawsuit to recover the debt, which can result in seizure and sale of property. It is important to remember that such actions are usually carried out by teams of legal professionals working for banks. Regarding how collectors can buy out a debt, this process is known as factoring — the direct purchase of debts from banks or microfinance organizations. Experts note that factoring requires a license from the government, and collectors profit from the difference between the amount paid for the debt and the recovered sum from the debtor. After acquiring debts, collectors typically try to settle amicably, but if nonpayment persists, they might resort to threats and intimidation. Therefore, knowing your rights and legal safeguards is crucial to protecting yourself from unlawful conduct. Ukrainian law allows individuals to write off portions or all of their debt, provided they adhere to proper procedures and regulations.