BULGARIA ADOPTS NEW REGULATION OF SALE AND SERVICING OF NON-PERFORMING LOANS

We bring you an important update from the Bulgarian banking sector – namely, a fundamental change in the rules governing the transfer of non-performing loans in line with the European legislation, significantly simplifying the entire transfer process.

In July 2025 Bulgaria adopted the Law on Credit Servicers and Credit Purchasers, which implements (but with little local customization) Directive (EU) 2021/2167.

The essential purpose of the law is to facilitate the transfers of portfolios of non-performing loans (NPLs), thus boosting a more dynamic market for such business. Banks now enjoy a clearer and quicker path for transferring them to specialized credit servicers or purchasers.

The law, most importantly:

• “codifies” the process of sale / purchase of NPL portfolios;
• streamlines the seller / purchaser catalogues of rights and obligations in NPL deals; and
• introduces tools for monitoring the credit servicing, which now becomes a licensed business (unlike mere loan purchasing).

Lender’s perspective

• Qualifying loans include only loans from financial institutions, while there are no restrictions to the capacity / position of the borrower.
• As far as enforcement of NPLs is concerned, that process would now be thrown to professional servicing providers operating under the supervision of the Banking and Consumer-Protection Regulators.

Borrower’s perspective

• Borrowers will enjoy the benefit of a new obligations on the purchasers / servicers to act in good faith and apply fair treatment. That would include additional rights as far as concerned are notification of transfer, commencing enforcement and completion of process at minimum damage. Credit purchasers may not go beyond collecting the originals debt plus statutory interest for delay.

EU-Servicing

• Credits-servicers from other EU Member-States are free to operate in Bulgaria on an as-local basis.