Loan Apocalypse in Russia
Hello everybody, today I want to tell you about the loan system in Russia. As well as the bankruptcy of individuals.
If right now the entire adult population of the country is being made to sit behind school desks and the teacher would give a simple command: "All those who have never taken loans in their lives should raise their hands ", then I think you already know there would be no hands raised.
That’s why I want all to know how the credit system of Russia works
The Chief loan shark of state is without a doubt, the Central Bank of Russia. This powerful organization performs quite a few important duties.
But the main function of the Central Bank of Russia is to refinance the loan system of the country.
Re-financing means the Central Bank giving out huge sums as loans to other commercial banks.
Russians no longer keep money in mattresses or 3 liter jars. They have begun keeping their money in banks. Debit cards are being issued to people, with which they cannot go broke.
At some point, when more than 20% of the state’s money is in the bank, massive lending begins and
Loans are being given at rather high interest rates. In the US or China it is being done at an interest rate of 2-5%. Meanwhile in Russia, it is 20-30%. That’s a big difference.
Later collection agencies that are being paid by banks show up. Their sole function is collecting money from debtors. Banks cooperate with the law enforcement system, and begin to seize properties that borrowers gave out as guarantee.
In reality, 90% of the money that people deposit in banks is not there. The money is being given out on loan. And that is why banks are beginning to share the interest percentages with those who keep money in the bank.
As at 2016, the population statistics of debtors is around 35,646,988 people.
With this increasing rate, by 2020, more than 80% of Russian citizens will be living in debt and will depend entirely on the banking lending system. Their children and grandchildren will be born already in debt.
Not long ago in Russia a law was passed on bankruptcy of individuals. The chance to start over with a clean slate.
As at now, the Federal Law of 26.10.2002 number 127-FZ (as amended on 13.07.2015.) "On Insolvency Bankruptcy" has been enacted on the whole territory of the Russian Federation, which gave the opportunity to undertake a bankruptcy for citizens of Russia.
The fact is that the number of debtors has increased: many citizens came under reduction, others have had their wages cut. All of them are now under one umbrella - inability to pay the loan. They got into debt, and getting out of it has unfortunately become very difficult.
Now lets talk about the bankruptcy process and what it entails.
The total sum of debts to credit and financial institutions should be more than five hundred thousand rubles before a person can be declared bankrupt.
Before a person is declared bankrupt he may use either of these three ways to solve the problem.
- Installment of debts (restructuring) is a revision of the conditions of the loan that was given.
- Confiscation of property. That is in the case if the bank granted a loan to the borrower with a property of the borrower as guarantee.
- Settled Agreement. It can be concluded, if the debtor and the creditor both agreee with each other and are confident that all conditions will be met.
If a person is declared bankrupt, the court appoints a financial manager.
No one can therefore seize or confiscate any property of the debtor.
There is a law against fictitious bankruptcy, on
the basis of which a person can be imprisoned for up to 6 years .
This has been instituted for people who will try to avoid legal fees.
An individual can be declared bankrupt only once in every five years.
There are however some disadvantages involved in the bankruptcy process :
- If a citizen is declared bankrupt, it means over the next five years, he has no right to enter into a loan agreement without having to mention of the previous of bankruptcy.
- After being declared bankrupt, an individual cannot occupy any management position for 3 years.
- Also, a person involved in bankruptcy process cannot travel abroad before of termination of proceedings on bankruptcy.
Even if immediately after a person has been declared bankrupt and but has accumulated a lot of new other debts, he can only be declared bankrupt again after 5 years.
According to statistics on 20 July 2016 there are about 10,586 cases of individuals undergoing bankruptcy procedures .
Based on the foretold, it must be concluded that the law on the declaration of an individual bankrupt is a timely and important step that contributes to the settlement of financial disputes and allows the debtor to escape from t economic bondage.
Thanks for reading !
It figures, the banks do not do any due diligence until after something big happens and it costs them billions. A few years later after that staff has moved on and new staff come in, same thing happens again.
It is called fractional reserve system, and it's a scam. The bank never keeps 100% of the depositor's money in the bank, only a small percent.
If only 30% of clients withdraw their money in cash, the banks go bankrupt.