Russia to beef up bankruptcy laws
Russia is to adopt a new bankruptcy law that will help both lenders and customers. Banks will have to reveal all charges, but in return, borrowers will have clear obligations to repay or face the threat of bankruptcy.
Duma Finance Committee officials have announced how lenders will have to declare the real effective interest rate – including all fees and charges.
Borrowers will be liable to forfeit their assets if they do not pay off a loan – in their turn.
“After the law is introduced the person will risk his assets and it will make him think hard before actually taking out a loan,” said committee’s representative.
The new law would apply to loans of more than about 4,000 dollars. Debtors would be given six months to avoid bankruptcy.
In the past disputes were settled through the courts. However lenders often did not pursue unpaid loans because the sums borrowed were low while the legal costs were high.
Given Russia’s traditionally high cost of borrowing, the proposed law could find broad support. If adopted, the new rules could actually benefit all borrowers.