State Regulation Of Debt Collection Activities In Kazakhstan

On 6 May 2017, the President signed the Law No. 62-VI 'On Debt Collection Activities' (herein referred to as 'the Law').

The Law governs the activities of debt collection agencies, including the creation, record registration, rights and obligations of those involved in debt collection activities.

The Law introduces the following concepts:

Debt collection agency is a company, which is a commercial organisation, listed in the Register of Debt Collection Agencies.

Debt collection activities describe the activities of debt collection agencies aimed at soft collection and settlement of the debt, as well as the collection of debt-related information.

The Law does not define the concept of soft collection, nor does it specify at what point in the process one can perform the debt collection activities. However, the wording of the Law implies that soft collection includes interactions between the debt collection agency, the debtor and/or their representative, and/or a third party, bound with the creditor under the bank loan or microloan agreement, provided that all statutory rules are observed.

The Law also stipulates certain limitations on the creditor in respect to the debtor for the debt collection period. According to Article 6 paragraph 5 of the Law, the creditor is not entitled to file a lawsuit on the debt collection or to demand the remuneration accrued while the debt was being processed by the debt collection agency. Neither can the creditor claim on accrued charges (i.e. fines, penalties, etc.) over said period for the untimely repayment of the principal debt and remuneration.

Compared to the activities of the collection agency, which is performed under a pre-trial collection agreement, the enforcement proceedings are directed at the enforcement of execution of executive documents (writ of execution, court orders, court rulings on securing the claim, etc.).

Debt under a bank loan agreement or microloan agreement describes the debtor's obligations to the creditor for the repayment of the principal debt, remuneration, commission fees, charges (fines, penalties) under a bank loan agreement or microloan agreement.

Creation and activities of the debt collection agencies

The Law sets the procedure and terms for the creation of the debt collection agency, as well as the terms of record registration and activity thereof.

The actual process of debt collection occurs when a debt arises under an agreement, the subject of which is outlined in the...