Problem Debt: Concept, Classification and Regulation

The article is devoted to the analysis of the concept and legal regulation of problem debts arising as a result of improper fulfillment of obligations by clients of credit institutions. In the process of analysing the types of problem debts, special attention is paid to the correlation of problem and overdue debts. Any overdue debt should be as problematic. Other debts may also be recognised as problematic if there are significant risks of default. The author comes to the conclusion that the issues of qualification of problem debts are within the competence of credit organisations. Government regulation applies to debt-related credit risks, as well as ways to collect such debt. Special attention in the article is paid to the issue of the dynamics of problem debt. Arising as a failure to fulfill a specific debt obligation, problematic debt can lead to the debtor’s insolvency, which means a change in the status and relations with other creditors. In order to ensure a balance between the rights of the creditor and the debtor, the author formulates a number of presumptions concerning problem debts.