Bankers push for a register of failed companies with outstanding debts

If an absolute 10-year prescription on personal liabilities is introduced, then a register of failed companies with outstanding debts should be created. This is the banking community's view on GERB's proposed amendments to the Obligations and Contracts Act which will make it possible to write off personal debt after 10 years of its initiation. According to the Association of banks in Bulgaria, the new register will have to differ from the current one. It should be much more detailed and cover not only loans to financial institutions but to utility companies, mobile operators and any other provider of services or goods, said Levon Hampartzoumian, Chief Executive of UniCredit Bulbank. Declaring bankruptcy should not be turned into a game – oh, let's defraud this bank now and wait x amount of years to pick another victim. "Ending up on such a register should lead to automatic and irreversible exclusion of an individual from the credit system. Otherwise, we are making conscientious debtors suffer the burden of bad loans because the abuse of rights is something of a national sport in Bulgaria," said Hampartzoumian, who is also Chairperson of the Association of banks in Bulgaria.

According to him, the period a borrower who has declared bankruptcy shouldn't be able to get a new loan has to be long enough, perhaps even indefinite. Anyone who fails would have to forget about the credit system. Hampartzoumian stressed that rights always have to come along with a certain responsibility. "If declaring bankruptcy is a right every individual has, then his/her responsibility should be to be denied access to crediting for a period of time," the banker added. He said that loans will become more expensive if proposed legislative changes trigger a wave of abuse of bankruptcy proceedings. Losses will have to be shouldered by conscientious clients. In response to the question whether insurance of mortgages could be the right solution to problems with monthly payments Hampartzoumian said that this will only shift the problem from banks to insurers. "Insurers could assume some of the risks but if it becomes a wide-spread practice, they will run into trouble or premiums will become too expensive to be viable. The latest BNB data on defaults isn't exactly encouraging but the issue with bad loans is obviously on the right track," said Hampartzoumian referring to BNB figures showing a second consecutive decline in bad loans (in June and July).

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