In the presented question, the authorized bodies and the credit institution pay attention to the legislative standards and acts prescribed in the Civil Code of the Russian Federation of November 30, 1994 N51-FZ and the Federal Law “On Consumer Credit” of December 21, 2013 No. 353-FZ. In this case, the basis is the following articles:
- 319 of the Civil Code of the Russian Federation - determines the sequence of payment of losses incurred by the organization due to non-compliance with consumer obligations;
- 395 of the Civil Code of the Russian Federation - prescribes the basis and rules for calculating fines, including fixing the maximum values for calculating penalties against the debtor;
- 809 of the Civil Code of the Russian Federation - determines the amount of loan debt: if the bank violated the presented norm of the law, the debtor, through the court, can invalidate the loan agreement and withdraw all charges regarding late repayment of the loan;
- Article 20 of the Law on Consumer Credit - the order of repayment of accrued fines and interest on accumulated debt is presented.
Failure to comply with the presented legislative acts calls violators to responsibility. In this case, it is necessary to highlight violations of the law by financial and credit organizations. Often they do not take into account the restrictions and indicate their data and requirements in the contract.
In the event of a trial, the court may take the side of the creditor even if there are violations in the contract. This is explained by the regulations of Article 421 of the Civil Code of the Russian Federation, which provides for the same - there is a clarification “unless the contract says otherwise.” Therefore, it is necessary to take into account the conditions specified in the loan agreement first of all.
The procedure for repaying credit debt
In accordance with Article 319 of the Civil Code of the Russian Federation, the following sequence of debt repayment is distinguished:
- First of all, all possible costs incurred upon the fact of the loan being issued by the borrower are repaid.
- Next, the accrued interest on the loan is repaid, calculated from the beginning of the current period for repaying the loan.
- Only after the above-mentioned debt has been repaid, the funds paid will be used to pay off the principal debt.
- The last thing to do is to pay off penalties in the form of fines and penalties.
Often, debtors confuse two types of accruals that were formed as a result of late loan payments. Borrowers accept payment of costs as payment of fines and penalties.
In fact, this shouldn’t happen, but financial institutions often take advantage of borrowers’ ignorance of the legal framework and write their own sequence of debt repayment into the loan agreement. The presented actions must be declared invalid through the court at the initiative of the borrower.
Unlawful actions include priority payment of fines and penalties, which are accrued immediately upon the occurrence of a delay in monthly payment. In this case, you should go to court, since in accordance with Article 319 of the Civil Code of the Russian Federation, the order can be modified - for example, under certain circumstances, loan interest payments can be canceled. Fines and penalties remain unchanged at the end of the priority list.
He will tell you how to get rid of a loan using legal methods.
The order of payment of principal and interest on it
If a situation arises where there is a possible delay, it is recommended to contact the bank to resolve the issue amicably - in this case they may offer debt prolongation, refinancing or restructuring.
Such actions will help to avoid accrued interest on the loan, which is not currently being paid on time and provokes the calculation of significant penalties for payment by the borrower.
Otherwise, you will have to face paying all the charges. This raises the question of the order of repayment of interest and principal. Based on the agreement, the bank will first repay the accrued interest, and only then will move on to the amount of the principal debt.
You can also argue with this by going to court to write off the loan interest. He can be written off if the judge determines that the consequences are disproportionate to the violated circumstances.
When determining proportionality, the judge pays attention to the following financial indicators:
- inflation indicators in the country;
- the cost of medicines and food;
- minimum wage sizes and so on.
You should not count on the judge accepting the plaintiff’s side, since these are complex mathematical calculations and can only be carried out by an independent credit expert.
As for the possibility of refusing to pay a fine, one should be guided by Article 333 of the Civil Code of the Russian Federation. The article applies in cases where the debtor intends to repay the principal part of the loan in full. To do this, you need to submit a corresponding application addressed to the head of the bank, in which you indicate the intention and request to remove accrued penalties from the debt amount in accordance with the specified regulatory act. In other cases, issues are resolved through court.
Lender's costs for executing the loan
Lender costs are an item of bank expenses that are repaid first under any circumstances. Based on Letter No. 141, the Presidium of the Supreme Arbitration Court of the Russian Federation decided that the amount of costs will include the following types of costs:
- All the costs incurred by the bank when issuing a loan - this assumes additional services provided to the potential borrower. As a rule, they are added to the amount of the principal debt. If a debt arises, the bank has the right, first of all, to use the paid funds to pay for the services provided.
- Expenses aimed at legal proceedings - payment of state fees for filing a statement of claim, consultations and services of a lawyer or attorney.
- Amounts of money that were spent by the bank on the sale of property pledged by the debtor - in most cases, this includes expenses aimed at paying fees for an auction held in a locality.
The bank has the right to include in the amount of costs expenses aimed at attracting the services of collection agencies.
In most cases, banks spend their own funds on litigation and auctions, where they put up for auction the property purchased by the debtor with a mortgage. In this case, there may be several auctions, which is influenced by the demand for real estate in the region.
Payments ahead of schedule
Partial and early repayment of the loan significantly saves the borrower’s money. Below we will consider these options, taking into account the nuances and legal rules.
Full repayment
Full repayment has significant advantages: you can not only reduce the amount of loan interest, but also save yourself from paying penalties based on the law. But you will have to pay interest in accordance with Federal Law No. 353 “On Consumer Credit”. Loan interest accrues only until the day the loan is fully repaid.
To do this, you should write an application to the bank with a request to calculate the repayment amount along with loan interest on a certain date. On this day, the borrower must deposit the calculated funds into the consumer loan account. Accrual of interest for the entire loan term is an unlawful action on the part of the bank, which leads to administrative liability.
Partial repayment
When partially repaying a loan for which debt has arisen, the borrower must take into account the following circumstances:
- The deposited amount will be distributed in accordance with the above order: first the costs are paid, then the accrued interest and only finally the money will go towards the principal debt.
- If the payment of fines is provided for in the agreement and in the event of a trial the bank has not made changes (fines can be assessed for systematic delays committed by the borrower), the remaining amount after payment of the principal debt (calculated at the time of crediting the funds) will be used to pay the fine.
- In order for partial repayment to take place in a timely manner, it is necessary to write an application addressed to the head of the bank with a request to write off debts on the next day of crediting a certain amount of funds - only in this way will funds credited in excess of what is required be spent to pay off the principal debt.
- It is important to take into account the features of the subsequent calculation: the amount credited to the principal debt may reduce the size of the monthly payment or reduce the loan repayment period. Often the bank provides a choice of what is specified in the contract - you need to correctly calculate your benefit.
Few people know, but most of the debt on a consumer loan is formed when the amount issued by the bank is refused to be used. The law on consumer loans states that the borrower has the right to return the money within 2 weeks after it is provided without paying any costs - commission for transferring funds or accrued loan interest. Repayment of borrowed funds occurs upon application addressed to the head of the bank.
There is a legally established procedure for repaying loan debt. However, banks can make their own adjustments to the contracts drawn up, so when signing them, you should carefully read the contents of the documentation in order to avoid further misunderstandings and material damage to the debtor.
The Cabinet of Ministers submitted to the State Duma bill No. 287844-7 with amendments to the law “On consumer credit (loan)” dated December 21, 2013 No. 353-FZ. The purpose of the changes is to establish a more favorable order for borrowers in repaying debt on consumer loans.
For reference.Part 20 of Article 5 of Law 353-FZ provides that if the borrower has made a payment the amount of which is not enough to fully fulfill the obligation under the consumer loan agreement, then first of all the bank will remove fines and penalties from the debtor for violating the loan repayment terms, and then, if anything left is counted towards the repayment of interest and principal for the current period.
In the explanatory note to the bill, the Cabinet of Ministers reports that the existing order of priority for the repayment of debt on a loan is at odds with Article 319 of the Civil Code of the Russian Federation, which establishes that if there are insufficient funds to fully fulfill the monetary obligation, the lender’s costs of obtaining fulfillment are paid off first, then interest, and the rest goes to repay the principal amount of the debt.
At the same time, interest in Article 319 of the Civil Code of the Russian Federation means interest for using a loan (Articles 317.1, 809, 823 of the Civil Code of the Russian Federation). Interest accrued for the purposes of civil liability (for example, provided for in Article 395 of the Civil Code of the Russian Federation) does not apply to those specified in Article 319 of the Civil Code of the Russian Federation and is repaid after the amount of the principal debt. This conclusion was repeatedly reflected in the acts of the highest judicial authorities.
The Cabinet of Ministers notes that the provision of Article 319 is practically applicable to companies in their relations with credit institutions. That is, the order of repayment of debt on consumer loans, currently established by law 353-FZ, puts citizens in unequal conditions with entrepreneurs, infringing on their rights.
Don't know your rights?
The draft proposes to make adjustments to Part 20 of Article 5 of Law 353-FZ and establish the following order of repayment of an individual’s loan debt in the event of insufficient payment amount to fully fulfill obligations:
- interest on the use of money,
- principal amount of debt,
- penalties,
- other payments.
By the way.Attempts to amend Part 20 of Article 5 of Law 353-FZ have been made several times previously. In particular, with a similar bill to the Cabinet of Ministers Deputy from the A Just Russia party V. Shvetsov spoke in 2016. However, the State Duma Committee on Finance recommended rejecting the deputy’s draft with the explanation that it did not take into account the role of the penalty as an incentive for the borrower to fulfill its obligations.
Perhaps, at the instigation of the Government of the Russian Federation, debtors on consumer loans will have better luck, and by making feasible payments, they will gradually pay off the principal debt, and not just pay fines, penalties and interest.
In the event that the termination of the activities of the debtor's organization or its structural divisions may entail man-made and (or) environmental disasters or loss of life, the costs of taking measures to prevent the occurrence of these consequences are also paid out of priority before any other claims of creditors for current payments.
(see text in the previous edition)
2. Claims of creditors for current payments are satisfied in the following order:
first of all, claims for current payments related to legal expenses in the bankruptcy case, payment of remuneration to the arbitration manager, collection of debts for the payment of remuneration to persons who performed the duties of the arbitration manager in the bankruptcy case, requirements for current payments related to payment for the activities of persons are satisfied, the involvement of whom by the arbitration manager to perform the duties assigned to him in a bankruptcy case in accordance with this Federal Law is mandatory, including the collection of debts to pay for the activities of these persons;
Secondly, the requirements for payment of wages of persons working or who worked (after the date of acceptance of the application for declaring the debtor bankrupt) under an employment contract, requirements for the payment of severance pay are satisfied;
in the third place, demands for payment for the activities of persons engaged by the arbitration manager to ensure the fulfillment of the duties assigned to him in the bankruptcy case are satisfied, including the collection of debts for payment for the activities of these persons, with the exception of the persons specified in paragraph two of this paragraph;
fourthly, requirements for operational payments (utility payments, payments under energy supply contracts and other similar payments) are satisfied;
(see text in the previous edition)
Fifthly, requirements for other current payments are satisfied.
Claims of creditors for current payments related to one queue are satisfied in calendar order.
(see text in the previous edition)
2.1. Requirements of the head of the debtor, his deputies, persons included in the collegial executive body of the debtor, the chief accountant of the debtor, his deputies, the head of the branch or representative office of the debtor, his deputies, the chief accountant of the branch or representative office of the debtor, his deputies for payment of severance pay and (or) other compensation, the amount of which is established by the relevant employment contract, in the event of its termination in part exceeding the minimum amount of relevant payments established by labor legislation, are not among the claims of creditors for current payments and are satisfied after satisfying the claims of creditors of the third priority, provided for in paragraph four of clause 4 of this articles.
3. When considering a complaint from a creditor regarding current payments, the arbitration court, when satisfying the complaint, has the right to determine the amount and priority of satisfying the creditor’s claim regarding current payments.
(see text in the previous edition)
4. The claims of creditors are satisfied in the following order:
First of all, settlements are made on the claims of citizens to whom the debtor is liable for causing harm to life or health, by capitalizing the corresponding time payments, as well as settlements on other requirements established by this Federal Law;
(see text in the previous edition)
Secondly, calculations are made for the payment of severance pay and (or) wages of persons working or who worked under an employment contract, and for the payment of remuneration to the authors of the results of intellectual activity;
(see text in the previous edition)
Thirdly, settlements are made with other creditors, including creditors for net obligations.
The principal loan debt (LP), or the body of the loan, is the amount that the bank provides to the borrower at the interest established by the agreement for a certain period.
If the loan is a mortgage, then the collateral property must be insured. Consumer insurance involves voluntary insurance. You can refuse the service within 14 days from the date of signing the agreement by submitting an application to the insurance company. Previously, the period was 5 days, but in September 2017, the Central Bank amended the list of standard requirements, increasing the period during which the client has the right to demand a refund.
If a person violates the terms or amount of monthly payments, the bank will charge a fine and penalty, which will increase the total amount of debt.
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How is the principal repaid?
Credit organizations offer two loan repayment schemes. Annuity (AP) and differentiated (DP).
Annuity payment
Money is deposited into the account in equal parts, but in such a way that 80% of the amount of the initial contributions is interest repayment and only 20% of the loan body. The bank uses this scheme most often, and by default, without even introducing the borrower to another payment option.
It is unprofitable to close a loan paid in this way early. The amount of ML will not significantly decrease in size over time, and the reward accrued for using the money will not be returned.
- The payment amount will always be the same. This will allow you to plan your family budget and not have to specify the amount of the next payment.
- The size of the approved loan will be larger, since the required payment should not exceed 50% of earnings. In the second option, the amount of payments is greater than under the AP and the borrower’s income may not fall within these parameters.
Experts believe that it is more profitable to repay the principal debt using an emergency loan if the loan is short-term and the amount is small.
Differentiated payment
Payment in unequal installments, i.e. first the principal is paid, and then the accrued interest on the remaining amount (monthly recalculation is done). The first payments will be larger than the last ones. Payment of the principal debt is carried out more efficiently and quickly.
In the first months, the borrower may experience financial difficulties, regularly paying increased amounts compared to the AP, but if the loan is closed early, it will be possible to save significantly. Most of it has been repaid and you won’t have to pay interest if you close it early.
Reducing payments will allow you to reduce your financial burden over time and insure yourself in case of possible financial difficulties. Experts advise that when taking out a loan for a large amount and a long term (mortgage, car loan), choose a DP.
When concluding a loan agreement, you should carefully read all the clauses. The customer needs to know how much a late payment or failure to pay for a long time can cost.
Banks, in case of violation of the conditions, impose a monetary penalty on the defaulter in the form of penalties, penalties and fines. Until recently, writing off ML when depositing funds to pay an overdue payment was the last thing to happen.
The first to write off were:
- interest;
- fines;
- penalty;
- fines;
- interest;
- main loan
Often, after paying fines, there was not enough money to pay for ML. The debt grew like a snowball. It was possible to cancel the penalty only in court, based on.
However, in July 2017, the Supreme Court of the Russian Federation, referring to the information letter of the Supreme Arbitration Court seven years ago, gave a clear explanation on this matter.
According to Art. 319 of the Civil Code, interest is written off first when repaying a debt, then the balance, and lastly the fine and penalty. Creditor costs, which are interpreted by banks in their favor, should be understood as costs associated with forced collection (payment of state duties, legal costs).
The loan agreement may also stipulate that the debtor is obliged to pay penalties and fines first, but this is contrary to the law, since such an agreement must be made within the framework of legal norms.
The debtor can challenge the incorrect write-off procedure by going to court or directly to bank employees, indicating the violation in the application.
The creditor must be notified of the decision made no later than 30 calendar days before the next payment date. Typically, partial closure of the loan is tied to this date (Article 11, Clause 5 of Federal Law No. 355). Before writing an application for early closure, you should carefully re-read the contract and make sure that the deadline for submitting the application is not shortened by the conditions, and also clarify the method of sending. Perhaps the agreement provides for the transmission of notification not only in person, but also via the Internet.
The borrower has the right to repay the principal and interest in full without notifying the lender about it within two weeks from the date of receipt of the consumer loan. With a targeted loan, the period will be 30 calendar days (Article 11, paragraph 3 of Federal Law-353).
If you do not warn the bank about the early closure of the debt, the deposited funds will not be taken into account as full payment. They will go to the credit account and will be used to write off the next regular payment. This is a common mistake that develops into a serious problem over time.
You need to understand that interest is charged for using money. Even if little time has passed from the date of signing the agreement and full payment, interest will have to be paid if the debt is fully repaid (Article 11, paragraph 6 of Federal Law-353). They will be accrued during the actual use of money, from the moment obligations arise until the day of full or partial fulfillment.
The law gives the bank 5 calendar days from the day the borrower notified about the early closure of the loan to provide data on the amount of the remaining debt and recalculation of interest (11 clause 7 of Federal Law-353).
What if I don’t pay in full?
In case of partial repayment earlier than the deadline specified in the agreement, the borrower is obliged to notify the lender within the time limits established by law.
Making a larger payment will change the loan amount. The bank will offer to repay the remaining amount in two ways, either by reducing the amount of regular payments while maintaining the loan term, or vice versa, by reducing the term and increasing the amount of mandatory payments.
Choosing the right option will depend on the payment plan. For example, with an annuity payment, if the loan was taken out recently, it is more profitable to increase the term and reduce the amount. If the payment were differentiated, then it would be more profitable to do the opposite.
Before accepting one option or another, you need to calculate everything and make a decision based on the data received.
Repayment of the principal debt. Repayment of penalties accrued in connection with late repayment of the principal debt. The order of debt repayment.
Question: Is it possible to pay towards the repayment of the principal debt, partially repay the penalty previously accrued in connection with the untimely repayment of the principal debt?
Answer:
The order of repayment of the loan, according to the Civil Code of the Russian Federation:
1) the creditor’s costs for obtaining execution;
2) interest;
3) principal amount of debt.
These rules are relevant if:
- the payment amount is not enough to fulfill the monetary obligation in full;
- the parties have not agreed to a different rule.
At the same time, this article deals with interest for the use of funds, which are payable under a monetary obligation.
Considering the above, when paying off a debt, you will first pay all costs, then interest, and only then the principal.
Rationale
The procedure for fulfilling a monetary obligation: how to ensure timely receipt of money
Fulfillment of a monetary obligation in parts. The order of repayment of claims
Obligations, including monetary ones, must be fulfilled in full accordance with the terms of the concluded agreement. This means that if the monetary obligation itself does not provide for the possibility of its partial fulfillment, then it must be fulfilled in full.
However, in real life there are numerous cases when the debtor is unable to fulfill his monetary obligation to the creditor in full and is forced to repay the existing debt in parts. In this case, interest will be charged on the resulting debt. In addition, the contract itself may provide for a penalty for late fulfillment of an obligation. How to qualify the next payment from the debtor in such a situation? Does it reduce the principal amount owed? Or are interest and penalties paid first?
If the amount of the payment made is not sufficient to fully repay the monetary obligation, the procedure for repaying claims is as follows.
First of all, the creditor's costs for obtaining a loan are repaid - payments that the creditor is obliged to make in connection with the forced implementation of his claim against the debtor (for example, the amount of state duty paid when going to court).
Secondly, interest for the use of funds payable on a monetary obligation is repaid (for example, interest for the use of the amount of a loan, credit, advance, prepayment, legal interest).
Attention: Previously, the amount of the principal debt is repaid only for those interests that do not relate to liability measures
Interest repaid earlier than the principal amount means interest on the use of funds that are paid under the agreement. In particular, interest on the use of the amount of a loan, credit, advance, prepayment, legal interest, etc. In other words, this is interest on the use of money (credit), which is not considered measures of liability for violation of the contract.
Thirdly, the principal amount is repaid.
This procedure for repaying a monetary obligation is established in the Civil Code of the Russian Federation. This procedure can be changed by agreement of the parties. For example, in the agreement the parties may provide that if the payment is insufficient to fully repay all monetary claims, the principal amount will be repaid first, and then the interest. However, the agreement can change the order of repayment only in relation to the lender's costs of obtaining a loan, a commercial loan and the principal debt. Overdue interest is always paid after the principal debt. Such rules are contained in paragraph 37 of the resolution of the Plenum of the Supreme Court of the Russian Federation No. 54.
Situation: Is it possible to stipulate in the contract a condition that if payment is insufficient, the debt for the penalty is repaid before the claims on the main obligation are repaid
In addition, creditors of the same debtor for homogeneous obligations may enter into an agreement on the procedure for satisfying their claims against the debtor, including the priority of their satisfaction and the disproportionate distribution of execution. At the same time, the parties to such an agreement are obliged not to take actions that are aimed at obtaining performance from the debtor in violation of the terms of the agreement. Such rules are established in paragraph 1 of Article 309.1 of the Civil Code of the Russian Federation.
At the same time, the creditor must keep in mind that the creditors’ agreement on the procedure for satisfying their claims against the debtor does not create obligations for the debtor himself, since he is not a party to such an agreement (). This means that he has the right to fulfill his obligations to creditors in the manner established in the relevant agreements.
However, the performance that one of the creditors received from the debtor in violation of the terms of the agreement on the procedure for satisfying claims against the debtor must be transferred to another creditor in accordance with the terms of the concluded agreement. The creditor who transferred the performance received from the debtor to another creditor passes the latter’s claim against the debtor in the corresponding part. Such rules are established in paragraph 2
