Article 9-2. Conditions and procedure for debt settlement and measures applied to an insolvent borrower of the Microfinance Law

Home / Laws / Article 9-2. Conditions and procedure for debt settlement and measures applied to an insolvent borrower of the Microfinance Law

1. Microfinance organizations are required to notify the individual borrower in writing in the manner provided for in the microcredit agreement, as well as through information technology facilities, of the occurrence of a delay in fulfilling monetary obligations under the microcredit agreement no later than ten calendar days from the date of the delay.

The specified notification must contain:

1) the amount of overdue payments under the microcredit agreement as of the date specified in the notification;

2) the requirement to make overdue payments under the microcredit agreement;

3) clarification of the consequences of non–fulfillment by the borrower, an individual, of his obligations under the microcredit agreement;

4) an indication of the individual borrower's right to apply to a microfinance organization with a proposal to amend the microcredit agreement in accordance with the procedure specified in paragraph 2 of this article;

5) other information at the discretion of the microfinance organization.

The requirement for notification through informatization facilities does not apply to credit partnerships and pawnshops.

The microfinance organization has the right to involve a collection agency to notify the borrower.

2. Within thirty calendar days from the date of sending the notification provided for in paragraph 1 of this article to the individual borrower by the microfinance organization, the borrower has the right to apply to the microfinance organization in writing and (or) through information facilities and (or) in the manner provided for in the microcredit agreement with a proposal regarding:

1) changes in the direction of decreasing the remuneration rate under the microcredit agreement;

2) reduction for a period of at least three months of the monthly payment under the microcredit agreement by at least fifty percent of the amount established by the microcredit agreement;

3) deferral of payments on the principal debt and (or) remuneration;

4) changes in the method of debt repayment and (or) the order of debt repayment, including repayment of the principal debt on a priority basis;

5) changes in the term of the microcredit;

6) forgiveness of overdue principal debt and (or) remuneration, cancellation of penalties (fines, penalties) related to servicing a microcredit;

7) independent sale by the mortgagor of the immovable property that is the subject of the mortgage, within the time limits established by the agreement of the parties;

8) submission of compensation in return for the fulfillment of obligations under the contract for the provision of microcredit by transferring collateral and (or) other property to a microfinance organization;

9) the sale of real estate, which is the subject of a mortgage, with the transfer of obligations under the contract for the provision of microcredit to the buyer.

The specified request from an individual borrower must contain information about the reasons for the delay in fulfilling obligations under the microcredit agreement, the borrower's current income, and other circumstances that determine (justify) the borrower's request to amend the terms of the microcredit agreement.

The procedure for reviewing amendments to the terms of the bank loan agreement and the micro–loan agreement, the list of documents attached to the individual borrower's application for amendments to the terms of the bank loan agreement and the micro-loan agreement, as well as the procedure for informing the second-tier bank and microfinance organization of the authorized body about the results of consideration of borrowers' applications – amendments to the terms of a bank loan agreement and a micro-loan agreement for individuals are determined by a regulatory legal act of the authorized body.

3. A microfinance organization is obliged, within fifteen calendar days from the date of receipt of the individual borrower's request provided for in paragraph 2 of this article, to consider the possibility of making changes to the terms of the microcredit agreement proposed by the borrower and to inform the individual borrower in writing in the manner provided for in the microcredit agreement, as well as through information facilities about one of the following decisions made by the microfinance organization, about:

1) consent to make changes to the terms of the microcredit agreement proposed by the borrower;

2) a counterproposal of the microfinance organization to the borrower on amendments to the microcredit agreement;

3) refusal to make changes to the terms of the microcredit agreement proposed by the borrower, with a reasoned justification for the reasons for such refusal.

The requirement for notification through informatization facilities does not apply to credit partnerships and pawnshops.

The decision of a microfinance organization on the borrower's application provided for in paragraph 2 of this article shall be taken by the microfinance organization in accordance with the internal procedure of the microfinance organization for making credit decisions on restructuring microcredits of individuals, taking into account the requirements set out in paragraphs 4 and 5 of this article.

The requirements for the internal rules for making credit decisions on the restructuring of microcredits of individuals are established by a regulatory legal act of the authorized body.

3-1. A microfinance organization is obliged to amend the terms of the micro-loan agreement specified in subitems 2) and (or) 3) of paragraph 2 of this Article in the cases provided for in paragraph 3-2 of this article, if an application with a proposal to make these changes is sent to the microfinance organization by any of the following borrowers:

1) related to socially vulnerable segments of the population in accordance with the Law of the Republic of Kazakhstan "On Housing Relations";

2) victims as a result of the circumstances that served as the basis for the introduction of a state of emergency.

3-2. The introduction by a microfinance organization of amendments to the microcredit agreement specified in paragraph 3-1 of this article is subject to any of the following conditions:

1) a decrease in the average monthly income of the borrower, calculated for the two months preceding the month of the borrower's application, by more than thirty percent compared with the average monthly income of the specified borrower, calculated for the twelve months preceding the month of the borrower's application;

2) the borrower receives state targeted social assistance at the time of his application to a microfinance institution.

3-3. During the period of consideration of the borrower's application provided for in paragraph 2 of this article, the microfinance organization is not entitled to demand early repayment of the microcredit.

Failure to reach a mutually acceptable solution between a microfinance institution and an individual borrower within thirty calendar days from the date of receipt by the borrower of the microfinance institution's decision provided for in subparagraph 2) paragraph 3 of this article is considered a refusal to change the terms of the microcredit agreement. The specified period may be extended with the consent of both parties.

4. The borrower has the right to apply to the financial Ombudsman for a pre-trial settlement of debt on a micro-loan not related to business activities, with simultaneous notification of the microfinance organization about this within three months from the date:

obtaining the decision of the microfinance organization provided for in subparagraph 3) of the first paragraph of paragraph 3 of this Article;

failure to reach a mutually acceptable decision on changing the terms of the microcredit agreement within the time period provided for in the second part of paragraph 3-3 of this Article.

During the period of consideration by the financial ombudsman of an application from a borrower, an individual belonging to socially vulnerable segments of the population, in accordance with the Law of the Republic of Kazakhstan "On Housing Relations", under a contract for the provision of a micro–loan secured by a mortgage of immovable property, which is a dwelling not related to entrepreneurial activity, judicial foreclosure on mortgaged property is not allowed.

4-1. If there is overdue debt on consumer micro-loans and (or) consumer bank loans not secured by property collateral to two or more creditors who are microfinance organizations, banks or collection agencies, the borrower has the right to apply for collective debt settlement through the collective settlement platform operating under the Financial Ombudsman service.

The criteria for debt subject to collective settlement, as well as the procedure and conditions for collective debt settlement, are established by a regulatory legal act of the authorized body provided for in part three of paragraph 2 of this article.

5. In cases of dissatisfaction with the requirement provided for in subparagraph 2) of the second part of paragraph 1 of this article, as well as the failure of an individual borrower under a microcredit agreement to exercise the rights provided for in paragraph 2 of this article, or the lack of agreement between the individual borrower and the microfinance organization to amend the terms of the microcredit agreement, the microfinance organization has the right:

1) consider the application of measures against the borrower.

The decision on the application of measures is made in accordance with the rules for the provision of microcredit;

2) transfer the debt for pre-trial collection and settlement to a collection agency.

The transfer of debt for pre-trial collection and settlement to a collection agency is allowed if there is a right of a microfinance organization in the contract for the provision of a micro-loan to attract a collection agency if the borrower is overdue in fulfilling obligations under the contract for the provision of a micro-loan.;

On the day the debt is transferred for pre-trial collection and debt settlement, the microfinance organization notifies the borrower about this in the manner provided for in the microcredit agreement, as well as through digital objects indicating the name, location of the collection agency, and telephone numbers of the collection agency for contacts with debtors.;

2-1) cede, in compliance with the requirements set out in Article 9-1 of this Law, the rights (claims) under the contract for the provision of microcredit to a person if the borrower is overdue in fulfilling a monetary obligation.:

under the agreement on the provision of a micro–loan to an individual secured by a mortgage of real estate - over one hundred and eighty consecutive calendar days;

under other agreements on the provision of micro–credit to an individual - for more than ninety consecutive calendar days.

The provisions of this subparagraph do not apply to cases where the procedure for restoring solvency, out–of-court or judicial bankruptcy is applied to a borrower who is a citizen of the Republic of Kazakhstan in accordance with the procedure provided for by the Law of the Republic of Kazakhstan "On Restoring Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan";

3) apply the measures provided for by the legislation of the Republic of Kazakhstan and (or) the microcredit agreement, including filing a lawsuit with the court to recover the amount of debt under the microcredit agreement, as well as foreclose on mortgaged property out of court, except in cases provided for by the Law of the Republic of Kazakhstan "On Mortgage of Immovable Property", or in court;

4) file a claim with the court for declaring the borrower, an individual entrepreneur, a legal entity bankrupt in accordance with the legislation of the Republic of Kazakhstan.

6. A microfinance organization is prohibited from receiving services from third parties for pre-trial debt collection and settlement, as well as collection of information related to debt, except in cases where such services are provided to the microfinance organization by a collection agency and (or) a service company.

7. It is not allowed for a microfinance organization to conclude an agreement on pre-trial debt collection and settlement, as well as collecting information related to debt, with a collection agency in respect of an individual whose debt is secured by a mortgage on real estate, which is a dwelling.

8. During the period when the debt is in pre-trial collection and settlement with a collection agency, a microfinance organization may not:

file a claim with the court for debt collection;

to demand payment of remuneration for the period when the debt is in operation from the collection agency, as well as to charge a penalty (fine, fine) for late repayment of the principal debt and remuneration during the specified period.

The Law of the Republic of Kazakhstan dated November 26, 2012 No. 56-V.

This Law regulates public relations related to the provision of micro-loans, establishes the specifics of the creation and reorganization of organizations engaged in microfinance activities, the legal status, activities of organizations engaged in microfinance activities, and also defines the specifics of state regulation of organizations engaged in microfinance activities, control and supervision of their activities.

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Republic of Kazakhstan

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