Interview of the Director of “Restitutor KP” Collector Company Loris Yeghoyan to Mediamax Agency and Banks.am portal

- Was the crisis the main conditions for founding your company? It is also interesting for us to know what particular tasks the collector business, in particular, your company, takes upon itself.

- I would not say that the crisis became the main condition for founding our company. Sooner, the crisis became a stimulating factor in conditions of increase in the level of problematic credits and unfulfilled liabilities. Naturally, financial credit organizations were forced to take measures to fulfill these liabilities on time. The problems of unfulfilled liabilities, or the ones fulfilled improperly, exist and will exist in our society: this very idea was in the basis of founding our company.

In the process of founding the company, we studied the practice of collector activity, examined the Armenian judicial practice to define the volume of confiscated liabilities, and this even more strengthened our intentions to launch collector activity. 

Speaking about tasks of the first Collector Company in Armenia – “Restitutor KP”, I would like to single out two basic factors. Of course, the first task is the collection of as larger a portfolio of overdue debts of individuals and legal entities or problematic credits as possible, that is to say, provision of our activity’s business component. Simultaneously, our business possesses elements of social responsibility and encourages the process of developing crediting in our county. It is not a secret that financial organizations do certain preliminary additions to their credit portfolios as to possible unfulfilled liabilities, which leads to increase of the credit interest rate. It turns out that because of negligent borrowers, practically all customers bear losses. 

Besides, very important is the protection of rights and interests of creditors, since the financial-banking system is a cornerstone, the main resource of RA economy development and a guarantor of attracting foreign investments. I am sure that in the majority of cases, one should defend the rights and interests of creditors by taking factual actions and not by endless theoretical analyses and research. I would like to urge all subjects, which have taken upon themselves the role of defenders of creditors’ rights and interests, to start cooperating with our company, which really defends the rights of creditors by its activities, helping them in struggle against debts and other negative phenomena.

- What is the structure of your customer base? Are there companies you work with on permanent basis?

- Our customers are banks, credit organizations, legal entities and individuals. Among banks we have permanent cooperation with “ACBA-Credit Agricole Bank”; we have started cooperation with “Artsakhbank”. Among universal credit organizations, we cooperate with “Nor Horizon” and there are negotiations in process on cooperation with “Aregak” UCO and other financial establishments.

Concerning non-financial organizations, in the majority of cases our customers are construction companies. I should note that in general the attitude towards our company in the Armenian business society changes each day in the direction of increasing confidence.

I would like to also note the significant growth of unfulfilled commitments between individuals, who also turn to us for our services.

- What is the period of overdue debts that banks and credit organizations transfer to you for collection? Is there a particular specificity of work as to return of the so-called old debts?

- Taking into account the fact that we are the first, and as far as I know, the only collector company in Armenia, I can say that there is no culture of business contracts with collector companies yet formed in the society and the financial-banking environment. This is why the level of time delay is to be decided upon by the financial organizations themselves.

Naturally, we are given the most problematic, I would say, “hopeless” cases. The terms of such overdue credits are quite long and may reach up to 2 years. We have repeatedly suggested servicing fresher cases, in particular, transfer debts with the delay of 30 days to outsourcing, which would lead to greater efficiency in collection of problematic debts. 

In any case, we work with all debtors basing on the same scheme, which consists of three stages: soft-collection – collection, check and analysis of information, establishment of a contact with the debtor by means of telephone calls; hard-collection – negotiation process concerning fulfillment of liabilities; Legal – legal proceedings. I would like to note concerning the last stage that the majority of cases, transferred to us, have already gone through court, and there are the extrajudicial procedures left for us to deal with: hold negotiations and influence the debtor within the framework of the law.

Of course, the process of return of old debts is a bit complex. First of all, the debtor feels far more confident, and in the course of time the conditions of the case already do not correspond to real conditions. For instance, in two years the debtor could have lost his/her job or moved to another country. In this connection, we have established bilateral cooperation with collectors in Russia, Ukraine and the USA.

- Has the structure of credit portfolios, handed over to your agency for service, changed in the recent months? In particular, do you have to deal with return of car credits?

- Consumer and card credits are the “leaders” in our portfolio in the sphere of overdue credits. The tendency of increase in the number of overdue car credits is obvious as well.

- Have you established contacts with operators of mobile connection and housing and communal services?

- We offered cooperation to “ArmenTel” and “VivaCell-MTS” mobile connection operators. However it turned out that since the activity of mobile connection operators is mainly related to postpaid payments, mobile connection operators have their own established mechanisms and experience on return of debts. 

At the same time I can name at least two motives to back transfer of overdue debts of mobile connection operators to outsourcing by a collector company. First of all, we do not receive salary, but we work on commission fees, so we are greatly interested in return of debts. And secondly, if the lawyers of a particular company, as a rule, dealing with return of debts, are burdened by various work duties, we are specialized exclusively on return of debts, thus acting with greater flexibility and more operatively.

Concerning companies of housing and communal services, in the nearest future we plan to initiate negotiation processes with some of them and we hope for a positive result.

- Who you face more problems with – individuals or legal entities?

- Everything depends on whether the debtor is solvent or not. If the debtor is insolvent, whether it is an individual or a legal entity, we face many problems. In case with an individual, not only he/she, but also his closest people, are interested in fulfillment of his/her commitments, so this gives us certain advantages.  

If we are based on the fact that both an individual and a legal entity are solvent, it is much easier to work with legal entities, since there are endless methods of influence on a legal entity: judicial proceedings, sequestration of property and financial means, at permissible levels – influence on business image of the company, etc.

- What sum of debts do you service today and what is the share of return?

- Let me not publicize the sum of debts we service, since this may inspire our potential competitors, or, on the contrary, disappoint them. Let it remain our commercial secret.

Concerning the second part of the issue, according to this month’s data, the share of collected liabilities made 55-58% from the total volume of cases we service. I consider this quite a high index, since, let me repeat, we receive the most complex, in the majority of cases – “hopeless” cases.

- What are the criteria that determine the volume of commission fees on your deals?

- The size of our commission fees ranges from 15-40%. Everything depends on the volume of cases we receive, their complexity, the time delay, on who the debtor is, his/her opportunities, etc.

Using the opportunity, I would like to note that buyup of problematic debts also enters our future plans.

- What problems, requiring legislative regulation, does a collector company face? What problems could the law solve for collectors?

- I will immediately note that collector activity in our country is not regulated by the law. At that, our activity does not contradict to the current legislation in the country.

Naturally, with the adoption of the law, we will gain certain privileges: we will receive information from governmental structures more operatively, collector companies will be provided certain authorities, related to the issue of establishing contacts with debtors, etc.

Undoubtedly, the legislative structure should be based on the logic that adoption of the law will benefit protection of creditor’s interests and if a collector company assists their activity, there is the necessity to provide it with wide authorities.

Armenia is not the only country, where collector business is not regulated by the law. Even in certain European countries there is no law on collector activity. The situation is different in the USA, where collector business has accreted with the state apparatus to such a degree that offices of collector agencies are located directly in the buildings of courts and the debtor, who comes to court, can repay the debt in the collector company and avoid further legal proceedings.

- They say that a collector is a psychologist in the first place. What other professional skills are necessary for collector activity?

- I believe that first of all the collector should be a competent analyst to get oriented in the situation correctly and in time. Of course, the presence of the psychological factor also plays an important role; I would say that psychological influence on the debtor is half the work. Besides, the collector should be a good lawyer and at the same time should possess financial education, since a real collector is the one, who will be able to heal the debtor’s situation in case of possibility by showing him/her the ways out of the situation, which we do in the majority of cases. 

- Do you expect increase in the number of collector companies in Armenia in the nearest future?

- There is demand for collector services, but at that the financial organizations are very conservative as to choosing partner organizations. I believe that collector’s activity will become a popular business, and, as it usually happens in such cases, the weak ones will leave the market in the course of time.