The Army of Debtors

Perhaps the most volatile, yet so far untapped, force in Russia is the army of those who cannot pay debt.

Sberbank, the largest bank in Russia, is selling a bad debt portfolio with a face value of $350 million to collectors, reports daily Kommersant. Last year, according to the general director of collection agency Sequoia Credit Consolidation Elena Dokuchaeva, Russian banks sold consumer debts for $2.7 billion. Mostly these are unsecured personal loans and credit cards delinquencies overdue by more than a year.

As we wrote, there is no law on individual bankruptcy in Russia. A significant number of Russians, maybe three or four million people, do not pay their debts and are doomed to constant, relentless pressure from collectors. They cannot declare bankruptcy and start living again.

The Kremlin is postponing adoption of the bankruptcy law. Why? It is afraid of misuse. That someone will not pay what he or she can.

Russian lawmakers, however, should keep in mind that bankruptcy was not invented for charity. The idea was to give people the chance to see light at the end of the tunnel, get an incentive to start earning again. For society, this is also a way to ease social tension and to stop the marginalization of entire social strata.