A draft Law on Loan Servicers and Credit Purchasers ("LLSCP") transposing Directive (EU) 2021/2167 of the European Parliament and of the Council into the Bulgarian legislation aims at addressing matters related to non-performing loans and preventing their possible accumulation.
The draft law introduces into the national legislation two main concepts – “loan servicer” and “credit purchaser”.
A “loan servicer” (must be a joint stock company) carries out activities for collection or recovering from borrowers payments due under credit agreements, renegotiation with borrowers of the credit agreements’ terms, administers complaints of borrowers, etc. Such companies will be subject to mandatory licensing by the BNB, will be entered in a special register maintained by the BNB and will be allowed to carry out any other commercial activity solely as an exception. There are also special requirements laid down for natural persons managing/representing loan servicing companies, requirements for the internal organisational structure of the latter, qualifying shareholdings, etc. A so-called "servicing agreement" is envisaged, which is considered a written contract between the credit purchaser and the loan servicer regarding the services that the loan servicer will provide on behalf of the credit purchaser.
A “credit purchaser”, on the other hand, will be any natural or legal person (necessarily registered as a trader) who is not a credit institution and who, in the course of his trade, business or professional activity, acquires receivables on non-performing credits. Such company acquires the receivables (the loans) from a credit institution (i.e. a bank) and, if it carries out self-servicing of the credit agreements (i.e. also as a “credit servicer”), it is also subject to licensing. The relationship between credit institutions that transfer their non-performing loans and the credit purchasers shall be governed by a contract, which also gives rise to certain reporting obligations of the transferor bank to the BNB.
The draft provides for rules on the communication with borrowers, "fair treatment" requirements, notification in event of assignments of receivables and other consumer-focused provisions. An interesting specificity is that loan servicers are required to structure, free of charge, within their internal operating rules, a procedure for the submission and handling of borrower complaints, by making clear, visible and legible information about the complaint procedure available on their business premises and on their website. The draft also proposes additions to the Anti-Money Laundering Measures Act ("AMLA") by explicitly including credit purchasers and loan servicers among the obliged persons.
Outside the scope of the draft law at this stage remain the servicing of a credit agreement when carried out by a credit institution established in the EU, a financial institution under Article 3a of the Credit Institutions Act (when servicing claims on non-performing loans for which it is the original creditor), a private bailiff or a public bailiff, the servicing of claims on non-performing loans not granted by a credit institution established in the EU, etc.
