The age of people who fail to repay their loans to banks or credit institutions from which they took out a loan is decreasing. The main debtor is no longer from a small town, but from the capital, Varna, Burgas and Plovdiv. The latest trend is due to the migration factor, according to the Association for Receivables Management (AUM).
The worrying trend that the main group of unscrupulous borrowers are under the age of 25 is mainly due to the lack of sufficient financial literacy. Perhaps it would be good to have limits on the amount of money granted to people up to a certain age, similar to the proposal that young drivers cannot drive cars above a certain horsepower. “This would be discrimination. With cars, it is about human life, while with overdue loans it is not“, commented Liliya Dimitrova, chairwoman of the Bulgarian Association of Credit Unions.
Despite the worrying trend, the market for quick loans is seeing an improvement in terms of solvency. For the period January-June of the current year, 38% more Bulgarians have paid their debts, compared to the same period last year. “There is a serious increase in loan payments. This for me is the best and most positive trend, also taking into account the question of what will happen after we enter the eurozone. 38% is a serious increase. In practice, people are starting to understand their financial commitments better. They become more responsible for their obligations, but they also probably have more opportunities to do so, i.e. they have better and more regular income. I hope it also means a brightening of the economy“, adds Dimitrova.
Also good news is that the average amount of consumer loans sold is decreasing. For 2024, it is 909 leva, while for the previous year it was 1324 leva. The advice of specialists is that, in order to avoid difficult servicing, no more than 1/3 of the monthly income should be returned monthly. “We need greater financial culture and more serious responsibility on the part of people for their own finances. They should always have several scenarios in place“, advises Dimitrova.
Another trend is that the part that we are assigned to as “outsourcing“ is constantly decreasing. The part that they sell to us as debt has remained relatively stable for the last few years. De facto, the Bulgarian market has been relatively stable for the last 5-6 years in terms of the debts that come to us for collection. “This is proof that our financial ecosystem is extremely stable, well predictable. In order for us to have about 500 million arrears as an absolute balance on an annual basis, this means that there is a relatively stable level of payments on consumer loans“, explains Dimitrova.
In recent years, there has been a trend that the level of payments on mortgage loans is very high and, accordingly, collateralized portfolios have hardly been sold in recent years or, if there are any, they are more likely to be corporate, rather than individuals with mortgage loans. “What happened in 2008-2009 will not happen again, because then the value of the properties was taken into account. Now the consumer's solvency is taken into account. Back then, banks created real estate companies that dealt with real estate. Banks no longer want that. They want to take deposits and give loans and focus on their core business“, says Dimitrova.
Another sustainable trend over the years, which is strongly observed in 2024 and the first half of 2025, is that there is a trend towards extrajudicial collection and concluding agreements with the debtor. Judicial proceedings only complicate and delay the collection process, and ultimately make it more expensive for the debtor himself, experts conclude.