If you took out a loan in Swiss francs years ago and your installment has jumped dramatically after the exchange rate increase — you are not alone. Thousands of people in Bulgaria are in a similar situation. The good news is that in recent years, case law — both European and Bulgarian — has increasingly sided with consumers in such cases. A key point is that we are talking about loans to individuals – consumers within the meaning of the Consumer Protection Act.
Here's the most important thing, explained in plain language.
Why is a loan in Swiss francs a problem at all?
When you signed the contract, you probably expected the installment to be more or less constant. In practice, however, the franc appreciated significantly against the leva and the euro after 2008-2011. The result: many people's monthly payments increased by 50%, 60%, even more - without them having done anything wrong. The exchange rate simply changed.
The question that the courts are considering is: did the bank inform you clearly enough before you signed the contract that the risk of such an increase in value was entirely at your expense? If the answer is "no" - there is reason to declare the clause transferring this risk to you invalid.
What does "unfair clause" mean?
This is a clause in the contract that creates a significant and unjustified difference in burden between you and the bank - usually because you didn't have the opportunity to fully understand it or negotiate it. The law says: if a clause is unfair, it simply doesn't apply. It's as if it doesn't exist.
What does the European Court of Justice say?
The European Court of Justice has considered exactly such cases many times, including a case specifically related to loans in Swiss francs. The conclusion is categorical: if the bank has not explained clearly and specifically what the real risks of exchange rate changes are — and not just technically how the currency conversion works — the currency risk clause may be void. And if the contract cannot exist without it, the entire contract may be declared invalid.
The court also considered what happens financially if the contract is void: the bank cannot demand "compensation" from you for using the money — can only ask for the principal back. You, in turn, have the right to get back the overpayment.
"Okay, but hasn't too much time passed?"
A logical question. Many people worry that the statute of limitations has expired. Here's some good news: the court accepts that the statute of limitations for a claim for the return of money paid under an unfair clause does not start to run from the date you paid the installment, but from the moment you realized (or could have actually realized) that the clause was unfair. This means that the statute of limitations is not automatically "expired" just because the loan is old.
Does this mean that the consumer will always win the case?
Not automatically — each case is individual. The outcome depends on:
what exactly is written in your contract;
what information did the bank give you when signing (were there any clarifications, declarations, risk simulations);
how exactly is the currency risk clause formulated?
What could you achieve if the case is successful?
Depending on the specifics:
Declaring the currency risk clause null and void — from now on, your installments will be recalculated without it;
Declaring the entire contract invalid — under certain conditions, with the return of overpaid amounts;
Recovering overpaid amounts due to exchange rate differences paid over the years.
What is recommended to be done?
Collecting documents — the loan agreement, all annexes, the repayment plan, correspondence with the bank.
Analysis of the case — every contract is different, and the assessment requires a specific legal analysis.
Legal consultation with a specialist who can review your specific contract and tell you realistically what the chances and possible steps are.
This article is for informational purposes only and does not constitute legal advice for a specific case. Every contract is different and requires an individual review.