Bulgaria’s debt collectors to be able to attach bank accounts electronically from January 1

Written by on October 21, 2012 in Bulgaria, News - No comments

Bulgaria’s debt collectors will be able to attach bank accounts of defaulting debtors electronically from January 1 2013, when amendments to the Civil Procedure Code come into effect.

For debt collectors, this will be more efficient and will reduce costs significantly. Currently, sending messages manually to all 30 banks inBulgariaabout seizure of bank accounts costs 540 leva (about 270 euro). Electronically, the cost will be 15 leva.

Georgi Dichev, head of the supervisory board of the Chamber of Private Enforcement Agents, said that at the moment lending institutions were offering about 925 million leva in real estate for sale because of defaulting on loans.

InBulgaria’s capital citySofia, about 42 million leva in real estate had been sold off in the past six months to recoup unpaid debts.

The number of defaulting debtors was increasing but the number of cases of debts being collected was worsening because of the crisis and people being in over their heads in debt, making sums irrecoverable.

Dichev said that there was no reliable figure for the total amount of bad debt inBulgariabut he estimated it to be a few billion leva.

In the past six and half years, since the chamber was set up, about 2.8 billion leva in bad debt had been collected.

Since the beginning of 2012, the largest transaction in debt recovery had been the sale of a hotel in Bansko, formerly owned by failed tour company Alma Tour, for 22 million leva.

Next along was a hotel in Banya, for 11 million leva, a property in Kurdjali for 8.6 million leva and the fourth an office that went at a “bargain” price of seven million leva.

Sofialed in the bad debt sales stakes, at 123 million leva, followed by Blagoevgrad at 38 million leva andStara Zagorawas in third place, at five million leva.

Dichev said that it was difficult to sell hotels and factories because “investors, not just buyers” were needed.

He said that the use of debt collectors was on the rise inBulgaria. In 2011, the amount of forcibly collected debts added up to 700 million leva. In the first six months of 2012, the amount was 465 million leva.

Overall, the sectors where there were the largest number of bad debts to creditors were the hotel industry, construction and retail business.

The rate of inter-company bad debt was on the increase. Already, the rate of bad debts being referred for collection was up 20 per cent in 2012, Dichev said. Private companies made up the biggest client base, with banks coming in only second, at 31 per cent of cases.

Elitsa Hristova, head of the disciplinary committee of the chamber, said that in the past six months a total of 325 complaints of misconduct by debt collectors had been filed.

(Photo: Clive Leviev-Sawyer)

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