Settlement of bad debts

Article 36 of the Law of the Republic of Kazakhstan "On Banks and Banking Activities in the Republic of Kazakhstan" stipulates the terms and procedure for debt settlement, and measures applied to an insolvent debtor, including:

1. Within thirty calendar days from the date of occurrence of a delay in the performance of obligations under a loan agreement, an individual debtor may visit a bank (an organization carrying out certain types of banking operations) and (or) submit an application, in writing or in the manner prescribed by the loan agreement, outlining the reasons that cause the delay in the performance of obligations under the loan agreement, providing information on an income and other confirmable circumstances (facts) that justify the debtor's application to amend terms and conditions of the loan agreement, including those related to:

1) Lowering the interest rate of the loan agreement.

2) Change of currency of the principal balance to the national currency on the foreign currency loans.

3) Deferred payment of principal and/or interest.

4) Change in the method or priority of debt repayment, including repayment of a principal debt first.

5) Change in the loan term.

6) Cancellation of an overdue principal and (or) interest, and forfeit (fine, penalty), commissions or other payments related to the loan servicing.

7) Independent sale by a mortgagor of the immovable property, being the subject property, in the manner prescribed by Article 20-1 of the Law of the Republic of Kazakhstan "On Mortgage of Immovable Property".

8) By providing a compensation represented by a pledged property transferable to a bank (an organization carrying out certain types of banking operations) in exchange for obligations to be performed under the loan agreement.

9) Sale of the immovable property, being the subject of the mortgage, and assignment of obligations under the loan agreement to the buyer.

Within 15 (fifteen) calendar days following receipt of an application of an individual debtor, a Bank (an organization carrying out certain types of banking operations) shall review the proposed amendments to the terms and conditions of a loan agreement in the manner prescribed by a regulatory act of an authorized body, and inform the individual debtor in writing or in the manner prescribed by the loan agreement of:

1) consent with the proposed amendments to the terms and conditions of the loan agreement.

2) its proposals to amend the terms and conditions of the loan agreement.

3) refusal to amend the terms and conditions of the loan agreement with a reasoned justification for such refusal.

1) To enforce recovery of money on any bank accounts of the Borrower, without recourse to court and by way of direct debiting, including by submission of a payment demand. The debt of a borrower being an individual under the bank loan agreement shall be recovered by submitting a payment demand within the limit of fifty percent of the amount available on the current account by making sure that an amount not less than the subsistence minimum set for the relevant financial year by the law on the national budget remains on the current account.

2) To apply any measures stipulated by the legislation of the Republic of Kazakhstan and (or) the bank loan agreement, including changing the terms of performance of the bank loan agreement, take legal action to recover the debt under the bank loan agreement and to foreclose on the pledged property in the extrajudicial procedure (except for the cases stipulated by the legislative act of the Republic of Kazakhstan on mortgage of real property) or through legal proceedings;

3) To transfer the debt for pre-trial collection and settlement to debt collection agency.

4) To assign the right (claim) under a bank loan agreement to a third party, if the borrower defaults on obligations under a bank loan agreement for more than ninety consecutive calendar days, and for more than one hundred eighty consecutive calendar days on a mortgage loan issued to an individual.