We are increasingly moving closer to lifting the moratorium on all term loans granted as pandemic relief. What will happen to people who have lost their jobs but owe money to banks – this will become clear at the end of March.

According to BNB data, more than 100 thousand are the requests for deferral of debts submitted by households to the banks, with more than BGN 82,000 approved and the total worth of the liabilities approved for a private moratorium being over BGN 1.8 billion.

Private bailiffs’ law firms did not close during the pandemic. “What exactly will happen after the loan moratorium is lifted is difficult to predict,” Ivan Hadzhiivanov, Vice-President of the Council of the Chamber of Private Bailiffs, said during the “Before All” talk show: 

“Before the state of emergency was imposed the Chamber came up with a proposal to limit enforcement actions against debtors in order to make it easier to survive the pandemic, then the State of Emergency Act limited the opening of new enforcement cases, the imposition of foreclosures, inventories, public sales, which in turn led to a drop in the revenues of private bailiffs for 2020 paid to the state budget and creditors.

After the end of the state of emergency, thе situation changed, banks no longer can afford un-serviced loans after the state of emergency is lifted”, added Hadzhivanov.

“People who have failed to pull themselves together and improve their financial discipline will have to pay their loans. We suggested that before enforcement actions are taken there should be an opportunity for debtors to sell property freely through private bailiff firms, because it will be much cheaper and faster than launching enforcement actions,” the expert said.

According to him, many apartments sales are already underway on the Black Sea coast, which are bought by Russian citizens.

The approved deferred loans of households to the banks amounting to BGN 1.8 billion are against the backdrop of total liabilities of a tad over BGN 25 billion in loans to households, i.e. deferred loans are below 10%”, commented the topic credit consultant Tihomir Toshev: 

“So in Bulgaria, despite the severe crisis, it is clear that the country has the lowest unemployment rate compared to other European countries, even in the most crisis-hit sectors. Because that’s where people managed to switch over to other businesses.

 But my expectation is that after the end of the moratorium some of the customers will not be able to cope with the situation. They will have to look for other solutions and such solutions will be available.

“My advice is that in such cases debtors should contact the bank and explain that they cannot start servicing their loans from April. From now on, the bank and the customer decide individually for each case what instruments to use – rescheduling the loan, refinancing, a new grace period, but not a new interest-free loan for individuals from the Bulgarian Development Bank – this would be a mistake to repay other loans with a new loan “, said Toshev.

In his words, people should not sit and wait so that they do not go to a bailiff. He does not expect an extension of the moratorium.