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Friday 25.05.2018 | Name days: Junora, Anšlavs
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Shrinking business sector bad debts

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RULast year, bad debts recovery of 161 077 627 lats was passed over to extra-judicial debt collection, including 29 605 legal persons (B2B) debts totalling 26 337 603 lats and 389 156 private persons (B2C) debts of 134 740 023 lats, according to Latvian-of-Court Debts Recovery Association data based on information provided by the leading companies of the sector.

The statistics shows private persons bad debts have remained on the level of 2009, while the total sum to be recovered has surged 21%. In contrast, B2B sector sees a considerable drop, the number of bad debts is down 43%, whereas the total sum to be collected has fallen by more than a half – 54%, with 52 thousand cases, totalling more than 56 million lats in 2009 shrinking down to 29 thousand cases amounting to 26 million lats in 2010.

This can be explained with the economic situation, resulting in businessmen losing their turnover and the total number of debtors is dropping as well. Businesses habits have also altered, they are now more carefully considering the solvency of the partner, requiring pre-payments more often. They simply have started to carry out more measures to prevent debts from appeareing at all, according to Latvian-of-Court Debts Recovery Association board chairman Agnese Priedīte.

Regarding private persons segment, bad debts linger on the same levels as in 2009. One of the reasons of this is the fact last year cases previously dealt with by the creditor, for example, secured loans, were passed over to debt recovery. Similarly, interest payments for delayed cases and penalty payments have surged as well, as bad debts passed on to extra-judicial recovery had been lasting for some time already, Priedite explains.

Latvian-of-Court Debts Recovery Association believes the future Debt Recovery Law to be reviewed by the Cabinet of Ministers this week will boost debt collection efficiency. This will make the whole sector more transparent, because all the companies operating in it will be licensed, thus data will be more easily available. Similarly, the law will also provide debtors rights and obligations, promoting people to settle their payments timely. It will also change people’s attitude towards debts and debtors and improve the overall situation in the country.


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