Legal protection of debtors is well developed in all the countries Bondora Group operates. In Finland, if Bondora or its agent obtains a court judgement against a borrower in default, then for example Finnish law states that there is a minimum level of income protected, that is related also to the number of dependants and is on average EUR 1,000 per month. This amount of the defaulted borrower´s income is protected from seizure by creditors, a court or a bailiff. In Estonia a similar principle applies, where defaulted borrower is entitled to retain the established minimum income level equal to minimum wage. In addition, one third of the minimum wage per each dependant cannot be seized by creditors, a court or a bailiff. The minimum gross wage in Estonia is currently EUR 430 per month and it will grow to EUR 470 per month in 2017. There are also limitations in Spain, whereby courts can rule in favor of the debtor limiting the level of interest that can be claimed.
Therefore, Bondora’s ability to seek recovery from a defaulted borrower with income below certain level is limited in Finland and Estonia and there are limits also in Spain that can be set by the court decisions.
Measure to mitigate risk
Bondora is aware of the relevant laws governing debtors and takes them into account in the Policy Rules. These rules do not allow credit to be granted to borrowers whose income is less than the statutory minimum income limit per month and these limitations on recovery are factored into loan pricing.