Agencies are not worried, but do not deny the fact that they would like to “take” the utilities in their hands

In 2019, the Government demonstrated its caring attitude to Russian debtors. The State Duma discussed the introduction of “mortgage holidays”. The Ministry of Finance of the Russian Federation also made its contribution: the debt can’t be recovered until the creditor tries to settle the dispute voluntarily and does not agree on a restructuring plan. 

Another innovation was proposed to make by Anatoly Aksakov, the Head of the Committee on financial markets at the State Duma. Until the end of January 2020, they want to develop a bill prohibiting debt collectors to enter into the agency contracts with management or energy supply companies to collect debts on rents. As reported by the newspaper “Izvestia”, the innovation will allow debtors to avoid abuse by professional debt collectors. However, the last ones are not sure that the law will protect debtors on utilities.

Management and energy supply companies have few resources because of large debts, and they will be forced to spend more money on debt recovery

Igor Filatov, the Head of Legal Department of the collection agency “Astcollect Group”, believes that the initiative of the State Duma will eventually damage not only the debt collection market, but also all parties to housing relations. The expert believes that debt collection agencies are more effective in collecting debts, as they have extensive experience with distressed assets.

“Management and energy companies do not have the necessary resources to collect debts. They do not have specially trained people, software, and local lawyers are competent in the field of service contracts, procurement or judicial representation in areas not related to debt collection, ” says Igor Filatov.

The lawyer believes that in the end, management and energy supply companies will go one of three ways:

– will open specialized departments for repayment of debts from residents;

– will spend money on courses for their employees in order to be able to work with debtors;

– will give the question of debt recovery by outsourcing to private organizations.

Taking into account the fact that providers of housing services do not always cope even with their basic duties, we should not expect high-quality debt collection on their part. A low percentage of debt repayment will worsen the financial conditions of companies, and because of it citizens may be left without the “benefits of civilization.”

Rare debt collection agencies work with utilities debts

Fedor Vahata, CEO of debt collection agency “M.B.A. Finance”, said that professional debt collectors could help in resolving the issue of debt repayment for housing and communal services. Professional debt collection within the framework of the law and technological capabilities of debt processing are significant advantages of collection agencies over various utilities.

“Utility debts have never been the main activity of debt collectors. The question of the possible recovery by professional collectors has been discussed for a long time. There was no prohibition, but there was no permission to collect. Some companies have transferred utility debts to work, but most fear that there will be violations of the legitimate interests of citizens. The main activity of the agencies is still related to bank and MFOs debts, so the new law will not affect our performance. Better to say that this is the desired direction of activity for us, ” – said Fedor Vachata.

The expert described the current situation in Russia: utility debts are growing, citizens do not pay, residents complain that there is a redistribution of these amounts to those who pay for services on time. In order for the system to work, we need a well-established mechanism for processing debts, preparing documents for judicial recovery. But utilities do not have such tools and experience as professional debt collectors.

In building lobbies, they hang out lists of debtors with the amounts of debts, send out multi-colored letters with the indication of data about debtors, write on walls. These acts are a violation of the law on disclosure of personal data. And such acts are committed by providers of housing services, while professional debt collectors often act within the law.

Fedor Vachata believes, if the law will come into the force, we couldn’t break down its provisions. No one debt collection agency that has the right to carry out debt recovery activities will circumvent the law. Professional debt collectors too much value their image: they have high demands. Therefore, they will not risk the reputation and jeopardize the very existence of the company.

To the fact that the supervision of debt collectors by bailiffs and other regulatory agencies has become tougher, and there are less and less complaints against professional debt collectors, the position of the State Duma, which does not want to transfer the work of debt repayment utilities to those who are best prepared for it, looks a little strange. But debt collectors will not argue with the Government. Therefore, it remains to be seen what the initiative of the Lower House of Parliament will lead to, whether there will be more bankruptcies among management and energy supply companies, and the amount of debts will continue to grow steadily.