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LEGAL ACTS OF THE REPUBLIC OF LATVIA
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The translation of this document is outdated.
Translation validity: 11.12.2012.–02.07.2019.
Amendments not included: 06.06.2019.

The Saeima1 has adopted
and the President has proclaimed the following Law:

Law On Extrajudicial Recovery of Debt

Chapter I
General Provisions

Section 1. Terms Used in this Law

The following terms are used in this Law:

1) debt - payment obligations which have not been carried out within the deadline specified by a lawful transaction or legal act;

2) debtor - a natural person who has not carried out payment obligations within the deadline specified by a lawful transaction or legal act, which he or she has undertaken by a lawful transaction or which are specified in legal acts, and who is operating beyond the scope of economic or professional activities thereof;

3) provider of debt recovery services - a person who recovers debts in the name of or on behalf of a creditor within the scope of commercial activities or professional activities thereof;

4) creditor - a person who has lawful relations with a debtor and who, on the basis of a lawful transaction or legal act, has the right to request the carrying out of payment obligations;

5) debt recovery - an aggregate of extrajudicial activities used by a creditor or provider of debt recovery services, inviting a debtor to voluntarily carry out the delayed payment obligations.

Section 2. Purpose of this Law

The purpose of this Law is:

1) to regulate the rights and duties of a creditor and a provider of debt recovery services in the field of debt recovery;

2) to ensure justice, commensurability and rationality during the recovery process;

3) to promote voluntary payment of a debt;

4) to promote the opportunity for the third parties to assess the carrying out of payment obligations by a natural person.

Section 3. Scope of Application of this Law

(1) This Law shall regulate the activity of providers of debt recovery services and prescribe the requirements for a creditor and provider of debt recovery services in respect of debt recovery and the creation of a database of debt history.

(2) The norms of this Law shall not be applicable for the recovery of a debt, which is carried out by a State or local government institution in the field of public law.

(3) This Law shall not affect the right of a creditor, provider of debt recovery services or debtor to turn to a court or an arbitration court. A court or an arbitration court shall adjudicate civil legal disputes arising from this Law in accordance with the procedures specified by the Civil Procedure Law.

(4) The norms of this Law regarding the reminder of a creditor shall be applicable insofar as is not specified otherwise by the Civil Law.

(5) The rights and duties of a creditor specified in Chapter III of this Law shall be applicable if the creditor is the performer of economic or professional activities.

(6) If the recovery of a debt is directed against a guarantor who is a natural person and operates beyond the scope of economic or professional activities thereof, the norms of this Law regulating recovery of a debt from a debtor shall be applicable.

(7) A cessionary shall carry out the recovery of a debt in compliance with the rights and duties of a creditor provided for in this Law. If the cessionary has acquired the right to claim on the basis of a cession within the scope of economic or professional activities thereof, the rights and duties of a provider of debt recovery services provided for by this Law shall be applicable to the cessionary.

Section 4. Supervisory Authorities

(1) The Consumer Rights Protection Centre (in respect of the protection of consumer rights) and the Data State Inspectorate (in respect of the protection of the data of natural persons), as well as other supervisory and control authorities shall supervise the compliance with this Law in accordance with the competence specified in regulatory enactments.

(2) The Consumer Rights Protection Centre, when supervising the compliance with this Law, is entitled to request the information necessary for the performance of its functions from a debtor, creditor or provider of debt recovery services, and specify the deadline for the submission thereof.

(3) If the Consumer Rights Protection Centre establishes that the non-compliance with this Law has caused or could cause harm to the interests of consumer groups (collective interests of consumers), it is entitled to take a decision, by which it assigns the creditor or provider of debt recovery services to terminate the violation of this Law or to rectify the violation allowed and determine the deadline for the performance of the necessary activities. The procedures by which the Consumer Rights Protection Centre shall take decisions and the procedures for appealing these decisions shall be determined by the Law On the Protection of Consumer Rights and the Unfair Commercial Practice Prohibition Law.

Chapter II
Activities of a Provider of Debt Recovery Services

Section 5. Special Permit (Licence) for Debt Recovery

(1) A provider of debt recovery services is entitled to recover a debt in the name of or on behalf of a creditor, if it has registered as a merchant or a performer of professional activities and has received a special permit (licence) for debt recovery [hereinafter - special permit (licence)].

(2) The Consumer Rights Protection Centre shall issue the special permit (licence).

(3) The requirement referred to in Paragraph one of this Section shall not be applicable to sworn advocates.

(4) The Cabinet shall determine the requirements to be complied with in order for a provider of debt recovery services to receive a special permit (licence), as well as the procedures for the issuance, use, suspension of operation, re-registration and cancellation of a special permit (licence).

(5) The provider of debt recovery services shall pay the State fee for the issuance and re-registration of a special permit (licence). The amount of the State fee and the procedures for the payment thereof shall be determined by the Cabinet.

Section 6. Reimbursement of Debt Recovery Expenses

(1) A debtor has a duty to reimburse the expenses incurred by a provider of debt recovery services for recovery of debt, if reimbursement thereof is requested and there is no dispute regarding the existence of the debt.

(2) The expenses for recovery of a debt shall be commensurate and objectively justified. The expenses for recovery of a debt shall be considered to be commensurate if they comply with the amounts permissible for expenses for recovery of a debt specified by the Cabinet (except those expenses which have been recognised as non-reimbursable by the Cabinet).

(3) The Cabinet shall determine the permissible amount of expenses for recovery of a debt and the non-reimbursable expenses.

Chapter III
Communication to be Implemented during Debt Recovery

Section 7. Duty to Provide True and Complete Information

(1) A creditor or a provider of debt recovery services, when commencing debt recovery, shall notify the debtor in writing regarding the existence of a debt and invite him or her to voluntarily carry out the delayed payment obligations. The following information shall be provided in such notification:

1) regarding a creditor - a legal person - the firm name (name), registration number, legal address, telephone number, electronic mail address and other contact information; regarding a creditor - a natural person - the given name, surname, personal identity number, address, telephone number, electronic mail address and other contact information;

2) regarding a provider of debt recovery services - a legal person - the firm name (name), registration number, special permit (licence) number, legal address, telephone number, electronic mail address and other contact information; regarding a provider of debt recovery services - a natural person - the given name, surname, personal identity number, special permit (licence) number, address, telephone number, electronic mail address and other contact information;

3) on what legal grounds the provider of debt recovery service has acquired the right to recover the debt - the type of transaction and the date of entering into the transaction;

4) the legal grounds for the creditor's claim-the type of transaction entered into by the creditor and the debtor, the date of entering into the transaction and the subject-matter of the transaction;

5) the amount of the debt, including the amount of the principal debt, the interest on allocation of the amount of money or other fungible property, the contracted or lawful interest and the amount of penalties;

6) the expenses for recovery of the debt (if any);

7) the procedures and deadline for repayment of the debt;

8) information regarding the opportunity to express justified written objections towards the existence of a debt, the amount and payment deadline thereof, providing that at least 21 days from the day of receipt of the notification are allotted for the expression of objections.

(2) If a creditor or provider of debt recovery services sends a written notification by mail or the debtor sends written objections by mail, it shall be deemed that the information has been received on the seventh day after handover thereof at the post office, even if the addressee has actually received the consignment sooner.

(3) During the time period specified for expression of objections by a debtor, the creditor and provider of debt recovery services shall not be permitted to carry out debt recovery activities (to include information regarding the debtor and his or her debt in the database of debt history or to carry out activities which increase the expenses of debt recovery, etc.), which may cause unfavourable consequences for the debtor.

Section 8. Duty of Co-operation and Expression of Objections Regarding a Debt

(1) A debtor has the duty to co-operate with a creditor and provider of debt recovery services.

(2) If a debtor admits a debt in its entirety or partially, but is unable to repay it according to the procedures or within the time period specified by the creditor or provider of debt recovery services, the debtor, justifying why carrying out of payment obligations is not possible, is entitled to offer his or her procedures and time period for settling the payment obligations.

(3) A creditor or provider of debt recovery services shall examine the proposal of a debtor referred to in Paragraph two of this Section for the settling of payment obligations and give the debtor an answer.

(4) Having received the objections towards existence of a debt or the amount thereof, the creditor or provider of debt recovery services shall justify in writing the existence of the debt and the amount thereof and, if requested by the debtor, issue copies of the documents justifying the existence of the debt and the amount thereof.

Section 9. Communication with Third Parties

(1) In communication with third parties a creditor and a provider of debt recovery services are not entitled to disclose information regarding a debtor without the consent of the debtor.

(2) In communication with third parties a creditor and a provider of debt recovery services are entitled to provide only the following information regarding themselves during the debt recovery process:

1) the given name and surname of the person who is implementing the communication;

2) the name (firm name) or given name and surname of the creditor or the provider of debt recovery services;

3) the contact information of the creditor or the provider of debt recovery services.

Section 10. Communication Culture

(1) In communication with a debtor it is prohibited:

1) to use aggressive means of communication (including expression of threats and carrying out of activities which infringe gender, age, race or ethnicity and safety, religious, political or other beliefs, disability, social background and financial or family status, as well as sexual orientation;

2) to communicate with the debtor in a manner offensive to his or her dignity or honour;

3) to visit the debtor at his or her place of employment, place of the performance of work or place of residence without prior consent of the debtor;

4) to provide false or misleading information regarding the consequences of non-payment of the debt.

(2) In communication with a debtor the creditor and provider of debt recovery services have a duty to observe commensurability.

(3) Communication shall be considered to be incommensurable if it:

1) takes place on Sundays or on public holidays determined by Law;

2) takes place between the hours of 21.00 and 8.00 or without prior consent of the debtor between the hours of 21.00 until 23.00;

3) encumbers the ability of the debtor to use the relevant electronic means of communication for daily communication.

Section 11. Means of Communication

(1) Unless otherwise prescribed by Law, communication with a debtor shall take place using the means of communication and contact information indicated in the lawful transaction entered into between the creditor and the debtor.

(2) If a debtor is not reachable by using the means of communication and contact information referred to in Paragraph one of this Section, or if it has been requested by the debtor himself or herself, the creditor and the provider of debt recovery services are entitled to use the contact information which has become known to them or used for communication with the debtor during previous co-operation.

(3) If a debtor is not reachable using the means of communication and contact information referred to in Paragraph one or two of this Section, communication with the debtor shall be implemented in writing, sending the necessary information to the address of the declared place of residence of the debtor.

Chapter IV
Database of Debt History and Inclusion of Information Therein

Section 12. Database of Debt History

(1) The database of debt history is an aggregate of data regarding a debtor and his or her debt, which is recovered in the name of or on behalf of a creditor, or has been recovered by a provider of debt recovery services.

(2) The holder of the database of debt history is the provider of debt recovery services.

(3) The purpose of the database of debt history is to provide information to a third party in order for it to be able to assess the ability of a natural person to carry out payment obligations.

(4) The provider of debt recovery services is entitled to create a database of debt history including information therein regarding the debtor and the debt thereof, if one of the following conditions is in effect:

1) the debtor has not expressed objections in writing towards the existence of a debt or the amount thereof;

2) the debtor has expressed objections in writing towards the existence of a debt or the amount thereof, but the court or arbitration court has recognised the claim of a creditor or provider of debt recovery services regarding the carrying out of obligations as justified and the judgment has entered into legal effect;

3) the debtor has expressed objections in writing towards the existence of a debt or the amount thereof, but the provider of debt recovery services has justified in writing the existence of the debt and the amount thereof and issued copies of the documents justifying the existence of the debt and the amount thereof to the debtor.

Section 13. Inclusion of Information in the Database of Debt History

(1) Information regarding a debtor and his or her debt shall be included in the database of debt history, if all the following conditions have been complied with:

1) carrying out of the payment obligations specified in a transaction or legal act has been delayed by more than 60 days;

2) the time period for expression of objections by a debtor specified in the notification of the provider of debt recovery services has expired and the debtor has not paid his or her debt within this time period.

(2) The following information shall be included in the database of debt history regarding a debtor and his or her debt:

1) the given name, surname, personal identity number of the debtor;

2) the date when the information was included in the database of debt history;

3) the amount of the debt, including the amount of the principal debt, the interest on allocation of the amount of money or other fungible property, the contracted or lawful interest and the amount of a fine;

4) the paid part of the debt;

5) the debt repayment duration;

6) the status of debt recovery (whether or not debt recovery is taking place; the date on which debt recovery was terminated; if debt recovery has been terminated - the reason for the termination - whether or not there is a dispute regarding existence of a debt or the amount thereof);

7) if the creditor is the performer of economic activities - the sector in which the creditor of the debtor operates in accordance with Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains.

(3) The provider of debt recovery services shall notify the debtor in writing regarding the inclusion of information into the database of debt history. The information included therein shall be made available to the third parties no sooner than 30 days after sending of the notification to the debtor.

(4) The third party, on the basis of a written contract with the holder of the database of debt history, is entitled to receive the information referred to in Paragraph two of this Section included in the database of debt history regarding the debtor and his or her debt, if the debtor has consented thereto in accordance with the procedures specified by the Personal Data Protection Law. If the debtor affirms that he or she has not given consent to the handing over of information included in the database to the third party, the person who declares that the consent has been given has the duty to prove the existence of such consent.

(5) If the provider of debt recovery services itself or pursuant to information provided by a debtor or other person detects that the information included in the database of debt history is inaccurate, incomplete or false, the provider of debt recovery services has a duty to immediately rectify these shortcomings and notify accordingly the third parties who have received the relevant information. A refusal by a provider of debt recovery services to rectify the relevant shortcomings may be contested at the Data State Inspectorate in accordance with the procedures specified by the Personal Data Protection Law.

(6) Information in the database of debt history shall be stored for three years from the day of payment of the debt or from the day when extinguishing of the obligations was carried out in accordance with the procedures specified by law. If a debt is not repaid, information regarding the debt of the debtor shall be stored in the database of debt history until the day when right to claim has expired.

Section 14. Information to be Received in the State Information System Regarding a Debtor

In order to implement the requirements of Section 7 of this Law, the provider of debt recovery services and the creditor who has received a permit (licence) for the provision of crediting services or which is a credit institution, is entitled to acquire the following information from the Population Register:

1) the declared place of residence of a debtor;

2) a confirmation regarding the death of a debtor.

Transitional Provisions

1. Section 5, Paragraphs two, three, four and five, as well as Section 6 of this Law shall come into force on 1 February 2013.

2. Section 5, Paragraph one of this Law shall come into force on 1 May 2013.

3. The Cabinet shall issue the regulations referred to in Section 5, Paragraphs four and five, as well as Section 6, Paragraph three of this Law by 31 January 2013.

4. A provider of debt recovery services is entitled to obtain the information referred to in Section 14 of this Law from the Population Register when he or she has complied with the requirement specified in Section 5, Paragraph one of this Law and received a special permit (licence) for debt recovery.

5. A provider of debt recovery services who has commenced debt recovery from a debtor, until the day of the coming into force of this Law, is entitled to include information regarding a debtor and his or her debt in the database of debt history, if both the following conditions have been complied with:

1) the debtor has not expressed objections in writing towards the existence of a debt or the amount thereof;

2) the provider of debt recovery services has legally acquired the data regarding a debtor and his or her debt.

This Law has been adopted by the Saeima on 8 November 2012.

President of Latvia A. Bērziņš

Riga, 27 November 2012

 


1 The Parliament of the Republic of Latvia

Translation © 2013 Valsts valodas centrs (State Language Centre)

 
Document information
Status:
In force
in force
Issuer: Saeima Type: law Adoption: 08.11.2012.Entry into force: 11.12.2012.Theme:  Banks, finances, budget; Consumer rights; ; Publication: Latvijas Vēstnesis, 186, 27.11.2012. OP number: 2012/186.1
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