The Council of Ministers has filed a bill in the National Assembly for an entirely new Consumer Credit Act (“CCA”), which aims to transpose the requirements of Directive (EU) 2023/2225 on consumer credit agreements (the “Directive”). For its part, the Directive aims to create the conditions for achieving a higher level of consumer protection in the context of the rapid development of the consumer credit sector, as well as opportunities to offer new types of consumer credit by adapting the legislative framework governing the provision of such products. The draft is entirely new compared with the initial version drawn up several months ago.
The measures taken to transpose the Directive into Bulgarian law are aimed at increasing transparency, simplifying the information provided on the granting of consumer credit, and restricting misleading advertising and the use of unfair practices. These measures are intended to reduce the potential risk of borrowers becoming over-indebted, as well as to promote responsible lending, including by ensuring greater security and confidence in the market, which in turn guarantees better consumer protection.
Of particular importance to both lenders and consumers is that the draft provides for a special regime for consumer loans whose total amount does not exceed three minimum wages, equivalent to EUR 1,860.60 for 2026. An exception to the general rule is provided for these loans: the restriction on credit costs, expressed as the annual percentage rate of charge (‘APR’), does not apply; instead, a maximum amount for the total cost of the credit is introduced. For credit agreements with a repayment term of (1) up to one month, this cost may not exceed 20 per cent of the principal amount; (2) between one and three months – 30 per cent; and (3) over three months – 100 per cent.
To illustrate this, consider the following example: for a loan agreement for EUR 1,000 with a repayment term of more than one month but not exceeding three months, the maximum total cost of the loan will amount to 30 per cent, which in this case would be EUR 300.
Under these conditions, the consumer must repay EUR 1,300. However, if the repayment term of the loan is more than three months, the maximum total cost of the loan will amount to 100 per cent, or, in this case, the principal amount – EUR 1,000 – which means that the total amount owed on the loan could reach EUR 2,000.
With regard to consumer loans that do not fall within the scope described above – i.e. those whose total amount exceeds three times the minimum wage – the APR cap is set at the same level as under the current Consumer Credit Act: five times the statutory interest rate for late payment.
Another significant change set out in the draft new CCA relates to the tightening of requirements for advertisements and commercial communications concerning the provision of consumer credit services. Particular emphasis is placed on consumer awareness and the prohibition on misleading consumers. The criteria that advertisements must meet relate to both form and content. Standard information in the advertisement must relate to the key features of the loan on offer and should be easy to read or hear, whilst taking into account the technical limitations of the medium used for the advertisement.
Stricter requirements are also laid down for the assessment of consumers’ creditworthiness. The creditworthiness assessment must take the consumer’s interests into account and be based solely on necessary and proportionate information regarding their income and expenditure, as well as other financial and economic circumstances. The creditworthiness assessment is carried out by analysing information on the consumer’s income, other sources of funds for repaying the loan, financial assets and liabilities, etc., as well as by consulting the Central Credit Register. It should be noted that the draft of the new CCA does not provide for creditors to have access to the Register of Gambling-Vulnerable Persons when carrying out creditworthiness assessments, which may be regarded as weakness of the draft.
The new CCA also provides for the creation of a Register of Creditors, which will be kept and maintained by the Consumer Protection Commission (“CPC”). Entry into the register will take place following the submission of an application and verification by the CPC that the legal requirements have been met.
Creditors subject to the requirements must submit an application for entry in the Register of Creditors within four months of the new CCA coming into force, but may continue to carry out consumer credit activities without registration for up to six months from the act’s entry into force.
The following entities are not subject to registration: (i) banks and branches of banks operating within Bulgaria, licensed under the Credit Institutions Act; (ii) financial institutions entered in the register under Article 3a of the Credit Institutions Act; (iii) payment institutions and electronic money institutions granting credit in accordance with the Payment Services and Payment Systems Act; (iv) suppliers of goods and services which are micro, small and medium-sized enterprises acting as creditors in a secondary capacity, granting credit in the form of deferred payment for the purchase of the goods and services they offer, where the credit is provided interest-free and subject only to a limited amount of charges payable by the consumer for late payments.
The draft bill also provides for a separate register of credit intermediaries for consumer credit, maintained by the CPC.
The new legislation represents a significant change to the consumer credit regime, imposing higher requirements regarding transparency, advertising, creditworthiness assessment and the conduct of creditors in the event of consumers experiencing financial difficulties. Of particular importance is the introduction of a special regime for loans up to three times the minimum wage, under which specific limits are imposed on the total cost of the loan. Furthermore, the creation of a Register of Creditors and the extension of their obligations are intended to strengthen market oversight and curb unfair practices. Overall, the proposed changes are aimed at providing greater consumer protection, limiting the risk of excessive indebtedness and building a more transparent and responsible consumer credit market in line with the requirements of European legislation.
Of course, intensive public consultations on the new draft are currently underway, and it remains to be seen what the final text of the act will be. The date currently scheduled for the new act to come into force is 20 November 2026.
This article has been prepared for and is part of the Legal Digest issued by Penkov, Markov & Partners. The publications therein do not constitute legal advice and are not binding. Penkov, Markov & Partners reserves all rights to this material, and any distribution thereof is subject to the prior written consent of the law firm.
