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New Consumer Protection Rules Introduced for Order for Payment Proceedings in Bulgaria

New Consumer Protection Rules Introduced for Order for Payment Proceedings in Bulgaria

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The “order for payment procedure” was initially introduced in Bulgaria with the adoption of the new Civil Procedural Code in 2007 as an accelerated enforcement procedure for debt collection. This procedure provides creditors with a relatively fast and easy way to obtain an enforcement order against debtors. In general, the order for payment procedure is like a closed administrative procedure and requires only the submission of a standard application form and payment of a state fee of 2% of the amount claimed.

The Civil Procedural Code introduced two different types of order for payment procedures providing different levels of protection to creditors. The ordinary order for payment procedure applies when collecting sums of money up to BGN 25,000 or fungible items, and for the delivery of movable items that the debtor has received with an obligation to return which are encumbered by a pledge, or which have been transferred to the debtor with an obligation to surrender possession. In such cases the court issues an ordinary enforcement order which is not immediately enforceable.

When the creditor has a receivable, regardless of the amount, based upon a specific document as listed in the Code, the court can issue an order for immediate enforcement and a writ of execution against the debtor. Through this order the creditor can, in most cases, immediately undertake execution actions against the debtor, regardless of any objections from the debtor’s side. The immediate execution can only be stopped by the court if the debtor provides adequate security to the creditor.

Following official notification of the European Commission dated January 24, 2019, referring to Council Directive 93/13/EEC of April 5, 1993 on unfair terms in consumer contracts and strongly recommending revision of the current enforcement procedure regulations in Bulgaria, the existing rules of the order for payment procedure were significantly amended, and new consumer protection rules were introduced in December 2019.

To fulfil the EU Commission’s recommendation and provide sufficient protection to debtors under consumer contracts, the Bulgarian parliament adopted several crucial amendments. One revolutionary change is the new procedural rule that the court is officially obliged to check for unfair terms in a contract with a consumer, and if any are found, not to enforce them. Court claims against consumers must be filed in the court in the region where the consumer currently resides, and exceptionally before the court where the consumer permanently resides.

With regard to the ordinary order for payment procedure, the changes include a requirement that the consumer contract be attached to any application for an enforcement order and a requirement that the court reject the application if it is grounded on an unfair clause in the consumer contract or if an assumption that it is so grounded could reasonably be made. The new rules also extend the term for objecting to the issued enforcement order from two weeks to one month as of the date of service in order to provide the consumer with enough time to react adequately.

The procedure for immediate enforcement has also been adapted to the recommendations of the EU Commission. One of the most criticized options for obtaining an order for immediate enforcement was the right of the banks to apply for an order against a consumer based only on excerpts from their accounting ledgers. Therefore, to provide more protection for consumers, banks are now also obliged to attach the document on which the receivable is based (and all attachments and general terms and conditions thereto) to the application for an order for immediate enforcement. Going forward, courts are obliged to cancel issued orders for immediate enforcement if receivables are based on unfair clauses in consumer contracts.

Consumers are also protected by the introduction of special new rules for suspending immediate enforcement. It is now enough for the consumer to provide only one third of the receivable’s amount as security to suspend the enforcement. Further, the court may also suspend immediate enforcement against a consumer even without security when there is written evidence that the receivable is based on an unfair clause in a consumer contract.

The amendments to the Civil Procedural Code from December 2019 are also reflected in amendments to Bulgaria’s Consumer Protection Law.

By Antonia Kehayova, Co-Head of Dispute Resolution, CMS Sofia

This Article was originally published in Issue 7.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.