Debt recovery under loan agreements in Almaty — we check the bank's calculation and reduce the amount

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Recovery of debt under loan agreements in Almaty

A bank, a microfinance organisation or debt collectors are demanding money from a borrower under a loan agreement, and the amount is noticeably more than the person actually borrowed. Penalties, commissions, insurance and interest for the entire term appear — and all of it is presented for payment in a single invoice. Working out on your own where the figures came from and which of them are lawful at all is difficult.

In Kazakhstan, a creditor can recover a debt through court, or can take a different route — for example, by applying to a notary for an enforcement endorsement. Each method has its own rules and time limits, and the final amount, and whether the borrower keeps their mortgaged home, depends on how the debtor behaves at this stage. Below is an analysis of situations, mistakes and documents that are worth preparing in advance.

Recovery of debt under loan agreements: who is demanding money and under what scheme

When a bank, a microfinance organisation or a debt collection agency demands a loan debt from you, it is important to understand straight away who exactly has made contact. A bank and an MFO usually act themselves or assign the work to debt collectors, who act under an agency agreement or after an assignment of the right of claim. Who the creditor is determines which documents they are obliged to confirm and what can be objected to.

Recovery of loan debt follows three routes: through a notary's enforcement endorsement, a court order or a full-scale claim. The activity of debt collection agencies is regulated by the Law of the Republic of Kazakhstan on Debt Collection Activity: an agency must be on the register maintained by the Agency for Regulation and Development of the Financial Market, and threats and pressure are prohibited. So a phone conversation is not a verdict, but merely one of the stages. Assistance with loan debts begins with checking who is demanding the money and on what basis.

• Bank: demands a debt under an agreement where you are the borrower or guarantor
• MFO: microloans with a high rate and rapid growth of charges
• Debt collection agency: acts under an agency agreement or after an assignment
• Notary: issues an enforcement endorsement on an undisputed claim
• Court: considers an order or a claim if there is a dispute over the amount

Bank recovery of debt under loan agreements: why the amount grows faster than the debt

The amount claimed is rarely equal to the balance under the payment schedule. The bank or MFO includes the principal, contractual remuneration, penalty for delay and various commissions, which pile up on top of each other over time. That is why bank recovery of debt under a loan agreement looks as though the debt grew on its own.

Most often it is the penalty and commissions that are inflated. Remuneration is often still charged after the creditor has demanded repayment of the entire amount, and penalties are calculated on interest together with the principal. A separate line is insurance and service payments that were imposed at the time of disbursement. For loans to individuals not connected with entrepreneurship, the law expressly limits the period for which the bank may charge remuneration and penalty after default — this limit should be checked separately. For loans to individuals not connected with entrepreneurship, the law expressly limits the period for which the bank may charge remuneration and penalty after default — this limit should be checked separately. For loans to individuals not connected with entrepreneurship, the law expressly limits the period for which the bank may charge remuneration and penalty after default — this limit should be checked separately. For loans to individuals not connected with entrepreneurship, the law expressly limits the period for which the bank may charge remuneration and penalty after default — this limit should be checked separately.

Each line should be checked against the agreement and the statement, not against the creditor's calculation.

Time limit for recovering loan debt: when the creditor is already late with its claim

A creditor cannot claim a debt indefinitely. The law gives it a limited period to apply to court, and if that period is missed without a valid reason, the court will refuse recovery. For the debtor this is not a formality but a working defence tool: the expiry of the time limit for recovering loan debt can be raised in an objection to a court order or in a response to the claim.

The period runs not from the date the loan was issued, but from the moment the creditor learned of the breach. Under agreements with a payment schedule, it is counted separately for each overdue period, not from the date of the last payment, so it is important to check whether earlier payments have fallen outside the period. The period may be interrupted if the debtor signed a restructuring agreement or acknowledged the debt in writing.

• The debtor must raise the expiry of the period: the court does not apply the limitation period on its own initiative.
• It is advisable to check the payment schedule and the creditor's calculation of the debt.
• A signed debt acknowledgement agreement interrupts the running of the limitation period.
• An objection is filed before the court order is issued or in the statement of defence.

Enforced recovery of loan debt: a notary's enforcement endorsement and a court order

When a bank or a microfinance organisation decides not to wait for a court, it can launch enforced recovery of loan debt through two expedited routes: a notary's enforcement endorsement or a court order. Both avoid a full hearing where the creditor is required to prove the amount of the debt, so the debtor only learns about the recovery of loan debts after the document has been received.

An objection can be raised at each stage. Against a notary's enforcement endorsement, the debtor files an objection with the notary — the document then cannot be enforced. Against a court order, an objection is filed with the court: the order is set aside, and the creditor is forced to go to contentious proceedings, where all charges are verified. The main mistake is to miss the deadline for objecting: the dispute then moves to the court enforcement officer, and the amount grows.

• check which document is being used to recover the debt from you
• against a notary's endorsement, file an objection with the notary
• against a court order, file an objection with the court
• do not wait until the case goes to the court enforcement officer
• keep copies of all documents received

An objection is not a refusal to pay, but a way to move the dispute to court.

Judicial recovery of debt under loan agreements: what the creditor proves

Judicial recovery of debt under a loan begins with the creditor's claim, to which it must attach the agreement with the payment schedule, the account statement, the calculation of the debt as at the date of filing, and information on how the borrower was notified of the overdue amount. Judicial recovery of loan debt is built on this package: until the creditor confirms each charge, the court cannot simply grant the claim. The defendant is entitled to state that the limitation period has expired, that the calculation is incorrect, that there are debits the creditor did not take into account, and that disputed commissions or insurance premiums were included in the principal debt.

Where exactly the debtor can object to the calculation:

• Reconcile the payment schedule with the statement: payments may not have been reflected or may have been posted late.
• Check where insurance premiums, commissions and service fees were allocated — to the principal debt or separately.
• Challenge the penalty and interest calculated after the agreement expired.
• State that the limitation period has expired: some of the claims may no longer be valid.
• Demand a recalculation if the creditor did not take into account an extension, restructuring or partial early repayment.

Recovery of debt under loan agreements from a guarantor: the scope of liability

The guarantor is liable to the creditor jointly and severally with the borrower, unless the guarantee agreement provides otherwise. This means that the bank or MFO is entitled to bring a claim for recovery of debt under the loan agreement against both the principal debtor and the guarantor — in full or in part. The creditor chooses whom to approach and is not obliged first to exhaust recovery from the borrower.

The scope of the guarantor's liability usually matches the amount of the borrower's debt: principal, interest, penalty and the creditor's costs. However, the guarantor is entitled to object to the claims and to challenge the calculation if the charges are inflated. After performance, the guarantor takes the creditor's place and may demand reimbursement from the borrower of what was paid.

It is important to distinguish which loan the guarantee was given for: if the agreement secured only the original terms, and the bank later increased the limit or changed the rate without the guarantor's consent, the liability may not extend to those changes.

When a claim is brought directly against the guarantor, the guarantor may raise the same objections as the borrower, including the creditor's expiry of the limitation period. If the guarantor has already repaid part of the debt, this reduces the total amount of recovery and is taken into account in further calculations.

How to reduce recovery of debt under loan agreements: penalty and calculation

The court is entitled to reduce the penalty if it is clearly disproportionate to the consequences of the breach. This concerns the penalties and fines that the bank or MFO charged on top of the principal and interest. The debtor's task is to show the court the real scale of the overdue amount and to achieve proportionality. On average we reduce the claim by 37%.

Prepare a counter-calculation: take the payment schedule, the account statement and the agreement, and calculate how much you actually paid and how much remains on the principal. Then separate justified interest from the inflated penalty. We have 9 years of experience in credit disputes and review a calculation within 1 day.

In the counter-calculation, show for which period and on what base the penalties were charged: the creditor often calculates them on the entire amount of the debt without excluding the parts already paid, and inflates them through double counting. Check the penalty rate against the terms of the agreement: if it is noticeably higher than the base rate of the National Bank and ordinary practice, this is an argument for the court. The mistake is to stay silent and agree with the final figure: the earlier you state that it is disproportionate, the higher the chance that the court will reduce it.

• Check whether the penalty exceeds the amount of the principal and interest
• Compare the penalty rate with market rates on loans
• Identify the period of delay that arose through no fault of your own
• Attach payment documents confirming partial repayment

Recovery of debt under loan agreements with collateral: what happens to the home

If a loan is secured by a mortgage or other real estate collateral, the creditor is entitled, in the event of delay, to foreclose on the pledged home. Foreclosure on the creditor's debt does not in itself mean that the flat will immediately be put up for auction: the Law of the Republic of Kazakhstan on Mortgage of Immovable Property establishes a special procedure under which the collateral is realised with respect for the rights of the debtor and other interested parties. The owner is sent a notice of the commencement of foreclosure, and further realisation proceeds through the procedure established by law — from valuation of the property to its sale.

Foreclosure on the home can be stopped on several grounds. First of all, it is worth checking whether the notification procedure was followed and whether the claim corresponds to the terms of the contract. If the creditor violated the notification procedure or other requirements of the procedure, and also if the amount of the claim is disproportionate to the value of the collateral, the debtor has grounds for objections. In addition, foreclosure can be stopped if the debt has already been repaid, a settlement agreement has been concluded, or the collateral has been terminated. In some cases, challenging the claim itself as to its amount helps.

• violation of the notification and foreclosure procedure
• the claim being disproportionate to the value of the pledged home
• full or partial repayment of the debt
• a settlement agreement with the creditor
• termination of the collateral on lawful grounds

Restructuring and instalments in the recovery of debt under loan agreements

When a bank or MFI is already demanding money, the borrower or guarantor should consider changing the terms of the contract — before the debt reaches a court enforcement officer. The most common options are restructuring, deferral and instalments. Each of them changes the schedule and eases the burden, but does not cancel the obligation. The borrower is entitled to request such terms from the creditor, and this is not an acknowledgement of the debt in the amount that has been calculated on top. For bank loans to individuals, the law provides for a separate procedure for settling debt: having received a notice of delay, the borrower is entitled, within the established period, to submit to the bank a written application to change the terms of the contract, and the bank is obliged to consider it and give a reasoned response. For bank loans to individuals, the law provides for a separate procedure for settling debt: having received a notice of delay, the borrower is entitled, within the established period, to submit to the bank a written application to change the terms of the contract, and the bank is obliged to consider it and give a reasoned response. For bank loans to individuals, the law provides for a separate procedure for settling debt: having received a notice of delay, the borrower is entitled, within the established period, to submit to the bank a written application to change the terms of the contract, and the bank is obliged to consider it and give a reasoned response. For bank loans to individuals, the law provides for a separate procedure for settling debt: having received a notice of delay, the borrower is entitled, within the established period, to submit to the bank a written application to change the terms of the contract, and the bank is obliged to consider it and give a reasoned response.

The application must be made in writing, keeping proof of sending, and attaching confirmation of income, a statement of debt and a calculation of payments. The guarantor should request the terms separately — their position depends on the principal debt. While negotiations are ongoing, the creditor is entitled to continue recovery, so in parallel it is worth checking whether the creditor itself is in delay and whether the charges are inflated. It is realistic to agree on one of the following options:

• restructuring — a new schedule, term or rate on the outstanding balance
• deferral — a pause in payments during difficult times
• instalments — splitting the amount into smaller parts
• a settlement agreement — already at the stage of court recovery

Documents in the recovery of debt under loan agreements: what the debtor should prepare

To object to the creditor's claims and control the calculation, the debtor needs to assemble their own set of documents. First of all, this is the loan agreement itself with all supplementary agreements, the payment schedule and documents on the disbursement of funds. Without the contract, it is pointless to argue about interest, penalties and whether the disputed amounts were part of the original terms.

Next, evidence of payments is prepared: account statements, receipts, payment orders, transfer confirmations. If recovery has already gone to court or to a court enforcement officer, the documents received will be needed: the statement of claim, the court order or the notary's executive endorsement, the decision to initiate enforcement proceedings. Separately, it is worth requesting from the creditor a detailed calculation of the debt, and in the event of a dispute over suretyship — the suretyship agreement with the date of signing and its terms.

• The loan agreement, supplementary agreements, payment schedule
• Documents on the disbursement of the loan and on each payment made
• The claim, order or executive endorsement received from the creditor
• A detailed calculation of the debt from the bank or MFI
• Surety agreement, if a claim is brought against the surety

The debtor's mistakes in recovering debt under loan agreements that cost the most

The most expensive mistake is to ignore a letter from a bank, an MFI or a debt collector. A person decides it is pressure and does not respond, and by the time the notary's enforcement inscription or a court order arrives, it is too late to argue: the deadline for objections has passed, and the debt is recovered in the amount claimed by the creditor. So any notification must be read immediately and the date of receipt recorded.

The second common mistake is to silently agree with someone else's calculation. The debt amount includes penalties, commissions, insurance and fees that have nothing to do with the principal debt, while the debtor checks neither the statement nor the payment schedule. To avoid this, check every figure against the agreement and your own receipts, demand a breakdown and state your objections in writing. Then proceed step by step:

• You have received a letter or a claim — do not wait, respond immediately
• Check the creditor's calculation against the agreement and your payments
• Submit written objections before the deadline for them expires
• Keep receipts, correspondence and copies of the documents you sent

What the fee for recovering debt under loan agreements consists of

The fee for recovering debt under loan agreements depends on the scope of work: how many loan agreements and supplementary agreements, statements and calculations have to be studied. If there are several claims or they concern different accounts, it takes more time than with a single agreement.

The cost is also determined by the presence of collateral and sureties, the stage of the proceedings and how disputable the amount is: at the pre-trial settlement stage the scope is one thing, in court and at enforcement it is another. The more documents and participants, the more complex the preparation.

Work on objections is assessed separately: if the bank has already charged a penalty and commissions, each item will have to be calculated and a counter-calculation prepared. A dispute over inflated charges takes more time than a case where the debtor agrees with the principal debt and asks only for an instalment plan.

The conduct of the other party also matters: when the creditor actively objects, submits additional calculations or brings in a surety, the scope of work grows.

• the number of loan agreements and claims;
• the presence of collateral and sureties;
• the stage: pre-trial, court, enforcement;
• the volume of documents and calculations;
• how disputable the amount charged is.

A calm and timely review of the terms of a loan agreement, the payment schedule and account statements often reduces the amount claimed more effectively than a dispute over the very existence of the debt.