Kazakhstan has Adopted a Debt Collection Law
On 10 May 2017, the President of the Republic of Kazakhstan signed the Law of the Republic of Kazakhstan Concerning Debt Collection Practices coming into effect on 2 June 2017 (the “Law”).
The Law is intended to regulate public relations arising from debt collection practices, to establish specific procedures and policies for incorporation and operation of collection agencies, and to particularize the government control and monitoring over collection agencies and operations thereof.
The main feature that distinguishes between collection practices and law enforcement practices is that collection practices are aimed at extrajudicial recovery and settlement of debt under bank loan agreements or micro loan agreements, and gathering of debt-related information.
The National Bank of the Republic of Kazakhstan shall be in charge of collection practices regulation and control.
Collection practices shall be implemented under a special agreement with a creditor, e.g. a second-tier bank, an organisation providing certain banking services, or a microfinance organisation holding a right to receivables from a debtor.
The Law limits communication between a collection agency and a debtor by means of telephone, person-to-person interaction, written (postal) notices, and text/voice/other messages over mobile applications and Internet.
The Law also limits the time of interaction and the number of contacts between a collection agency and a debtor, e.g. from 08:00 a.m. until 09:00 p.m. (by the time of a debtor’s residence, registration or location) on business days; maximum three times a week and maximum one time between 08:00 a.m. and 09:00 p.m. on business days in case of person-to-person communication; and maximum three times between 08:00 a.m. and 09:00 p.m. on business days in case of a telephone call initiated by a collection agency. Such interaction process shall be recorded by audio or video devices.
A debtor may approach a creditor with a proposal to amend the relevant loan/microloan agreement, and the creditor shall consider such proposal and notify the involved collection agency of their decision. Besides, a debtor may (i) contest collection agency’s claims, either judicially or extrajudicially, (ii) appeal against actions/omissions of a collection agency in the appropriate government authorities, (iii) record the process of interaction with collectors by its own means, and (iv) exercise any other rights provided by the Law.
During the period while a collection agency implements certain measures for collection of debt from a certain debtor, the creditor may not file any legal actions for recovery of such debt or for payment of interest, fine, penalty or other amounts related to the principal debt or interest thereon.
The Law introduces the definition of ‘collection privilege’ which includes any information about debtor, creditor, debt, third parties bound by obligations to creditor under a bank loan or micro loan agreement, terms and conditions of signed debt recovery agreements, and any other information gathered and/or created by a collection agency in the course of its collection practices. Collection privileged information may be disclosed to third parties subject to debtor’s consent, as well as to government authorities specified by the Law and to credit bureaus.