The debts of Bulgarian citizens which had to be collected by the collection agencies increased with over EUR 75 million year on year, are search of the Association of the Collection Agencies in Bulgaria shows. However, it does not mean that the total indebtedness of the Bulgarian population has risen. The recent data shows that the creditors have become more active demanding their money.

Solicitor Petar Hranov told BGNES agency that the collection agencies take advantage of the lack of knowledge of the Bulgarian citizens. When signing documents issued by such companies, people basically admit their debt. Thus, the term of limitation is cancelled.

Can Bulgarian citizens trust the local debts collectors and what they should know, in order to prevent possible frauds?

Here is what the member of the Managing Board of the Association of the Collection Agencies in Bulgaria Alexander Grilihes said in an interview for Radio Bulgaria:

“When people have doubts whether a given sum is due, they should require proof such as invoices, rates, reimbursement plans, etc. The members of the Association of the Collection Agencies in Bulgaria adhere to a very strict ethical code. I can assure you that all companies which are members of this agency collect sums which are actually due. We also heard of bad practices in this business, but we are fighting energetically against this phenomenon and I hope that these cases will soon remain in the past.” 

The results of the collection companies highly depend on the type of debts. With regard to the new debts, the companies manage to collect 70-80 percent of the sum. When they collect old debts accumulated over the years, it is very difficult to contact with the debtor and reach an agreement later. In such cases, the collection companies usually manage to collect between 2 and 5 percent of the total amount, depending on the portfolio of the debt.

Which sector accumulates highest debts? What makes payments overdue?

“The overdue payments occur, because most Bulgarian citizens barely manage to make both ends meet. They have limited financial recourse and they have to distribute this money between all payments due. People usually try to make the priority payments first such as mortgage installments. Then they prefer to pay for the services which make their life most comfortable. For instance the electricity bills are of top priority for them, because the service may be interrupted right after the deadline and people have no alternative to electricity-you have to pay your energy bill, in order to use electricity. Then people start to think about other payments such as credit card payments, phone bills, etc. If their phone service is interrupted for example, people can always join alternative provider. People pay their hot and cold water bills last, because this service can not be interrupted.”

Are Bulgarian citizens better payers than other European nations?

“There are single credit registers all across Europe. If someone refuses to pay his bill, the information is sent to other economic subjects and institutions and later people find it difficult to receive a new credit, or sign a new contract for a similar service. Unfortunately, such registry does not exist in Bulgaria. The Bulgarian National Bank supports a Central Credit Register only, where all debts to financial institutions are recorded. However, if people fail to pay for any communal services such as water bills, they do not risk worsening their reputation. Perhaps, that is why we are witnessing higher levels of indebtedness in Bulgaria. This trend will continue until we launch a new mechanism for control. ”

Against the backdrop of declining new debts Alexander Grilihes forecasts that if the national economy continues to grow, the total indebtedness in Bulgaria would decrease.

English version: Kostadin Atanasov