Communal Routine. Debts on Housing and Public Utilities as One of the Most Problematic Categories of Enforcement Proceedings


Relations between Russian citizens and Housing and Public Utilities enterprises is a complicated and multifaceted process which raises a great amount of different problems. And the central problem of such an interaction is non-payments for utilities which create additional difficulties to court bailiffs. Debtors have different motivation for unconscientious repayment of utility receipts, moreover, debtors themselves are different, too.

As a rule, two categories of non-payers are distinguished. The first and the most numerous category is represented by socially degraded citizens. These people often have not any property, job and stable income.

The second category of non-payers is well-to-do people who due to their busy life simply forget that utility receipts must be paid systematically. Or they do not have the possibility to pay in time because they are frequently absent due to business trips, departures, etc. 

Also there is a division by age categories. More specifically, the most disciplined payers are people of retirement and pre-retirement age, who have kept the habit to pay regularly and fully since the Soviet times. Accordingly, young people represent less disciplined group. 

Difficulty of debt recovery lies in the very character of debtors – natural persons. First of all, it is absence of property and incomes. Some of them have nothing to levy execution on. 

If there are some objects for levy, then levy of execution is complicated by diversity of things, the problem of their exact evaluation, and also by legislative ban on levy of execution on certain personal things. Apart from property, levy of executon on a debtor’s money income (salary, alimonies, etc.) also becomes an uneasy task. Unlike organisations, citizens have wider opportunities to conceal sources of their incomes. Some citizens manage even to conceal the permanent place of work, to say nothing of temporary side jobs.  

The biggest problem of the recovery process lies in resettlement of debtors and their family members into accomodation of smaller area with partial amenities in case if the debt on payment of housing and public utilities cannot be recovered from available property and incomes. 

First, the court decides to recover the debt on utility payments, a recoverer (in most cases it is a managing company) submits an enforcement document to the Court Bailiffs Service. After that a decree on institution of enforcement proceedings is sent to the parties. When a debtor receives the decree, he is obliged to appear to a bailiff during the stated time period. If the debt has already been repaid fully or partially, he has to submit payment receipts. If the debt has not been repaid, he can repay it at the bailiff. For a voluntary debt payment the debtor is given the period up to five days. 

After five days the bailiff makes a decree on levy of enforcement charge (7% of the debt sum). It means that the debt sum increases. 

The main measure concerning debt recovery is levy of execution on the debtor’s property. 

First of all, levy is executed on monetary funds and periodical money payments. The main sources of funds are monetary funds on the bank accounts as well as salary and other periodical payments. As a rule, the search for objects for levy of execution begins from these sources. 

If there is not enough money, here comes the property’s turn.  Initially the property is seized. By the way, upon the creditor’s request the property is seized from the beginning of the enforcement proceedings. 

In case if the debtor or the bailiff do not pay the debt by means of money, this property is liable to be sold at an auction, and the proceeds is used for repayment of the debt. 

If the debtor owes a payment for the accomodation and utilities for more than six months, then he may be evicted in a judicial procedure with assignment of another accomodation (6m2 for a person). 

According to the law, the debtor and his family members can be evicted out of the flat, if the debt exceeds six months. In this case other accomodation must be assigned to the non-payer according to the norm of 6m2 for a person. This procedure affects debtors who occupy accomodation under the contract of social rent. 

The law allows to evict owners of privatised accomodation as well. In this case the court must declare the debtor a bankrupt, to sell his flat at an auction, to recover debts and legal expenses and to return the difference to the owner of the living space. However, in this situation courts will take into account the fact that the debtor may have a free living space where he can move in case if he looses his flat. 

Apart from seizure of property and monetary funds mentioned above, as well as from eviction, communal debtor are to face other sanctions.

The federal law N229-FZ On Enforcement Proceedings has significantly expanded the list of enforcement actions which can be applied to debtors (including debtors for housing and public utilities). According to this law court bailiffs will be able to enter accomodation owned by a debtor without his consent upon having a written permission of a senior bailiff, and in case of execution of an enforcement document on a recoverer’s occupancy or a debtor’s eviction – without such a permission. 

Also the bailiff’s right to temporarily restrict a debtor’s departure from the Russian Federation upon nonfulfillment of an enforcement judicial document in time and without good reasons is formalized in legislation (sub-item 15, item 1, article 64 of the Law N229-FZ). 

Other concerned persons give certain support to bailiffs. In particular, suppliers of public utilities develop the mechanism when communal debtors are cut off from utilities – water and electricity. 

Besides, the struggle against debtors can result in other restrictions of their rights – for example, rejection of loan granting to natural persons by regional banks. 

Source: Bailiffs’ News

23 March 2011