Publication date: 26.03.2025
My name is Irina Sidorova and I am a lawyer based in London. I have over 18 years of experience in law and prior to moving to the UK I specialized in litigation, corporate support, contract analysis and drafting, and commercial legal support. My expertise includes a detailed analysis of legislative changes and their effective application to protect clients' interests. Thanks to my strategic approach, knowledge of the law and practical experience, I help to avoid legal risks and achieve stability in legal matters.
Initial Data. The client, an individual, received a lawsuit from a financial institution for debt collection under a loan agreement. The plaintiff demanded . repayment of the principal debt and also charged a significant amount of penalties over the past ten years.
Legal Aspects. Analysis of the statute of limitations for the principal debt and accrued penalties. Assessment of the legitimacy of the charges and compliance of the loan agreement with current legislation. Identification of potential violations by the financial institution.
Lawyer's Actions. A detailed analysis of the loan agreement and payment history was conducted. It was found that a significant portion of the debt was disputable, and the accrued penalties were subject to reduction due to violations of fairness and reasonableness principles. A legal position regarding the application of the statute of limitations was prepared, which allowed the creditor's claims to be partially or entirely nullified. The client's interests were represented in court, where the plaintiff’s claims were successfully refuted.
Result. The court denied the claim, recognizing the illegitimacy of a significant portion of the charges. The client's interests were successfully defended, helping to avoid substantial financial losses.
Types of Loans in Financial Institutions
- Consumer loans – loans for personal needs (purchases, repairs, medical treatment, etc.).
- Mortgage loans – for purchasing real estate.
- Auto loans – for purchasing vehicles.
- Business loans – for entrepreneurs and companies.
- Credit cards – limited loans with partial repayment options.
- Overdrafts – short-term loans allowing expenditures beyond the account balance.
What Is Debt?
Debt arises when a borrower fails to repay a loan on time. This may lead to:
- Fines and penalties – additional charges for overdue payments.
- Lower credit rating – making it harder to obtain new loans.
- Debt collection efforts – banks may transfer the debt to collection agencies.
- Court enforcement – financial institutions may sue for debt recovery.
Ways to Resolve Problematic Debt
- Debt restructuring – changing loan terms (reducing payments, extending the term).
- Refinancing – taking out a new loan on better terms to repay the old one.
- Pre-trial settlement – negotiations with the bank for a compromise.
- Personal bankruptcy (in some cases, debts can be written off through court proceedings).
Each case should be considered individually. A qualified lawyer, Iryna Sydorova, can help legally resolve disputes with financial institutions.
Statute of Limitations for Debt and Accrued Penalties
In Ukraine, the general statute of limitations for debt collection is three years (Article 257 of the Civil Code of Ukraine). This means the creditor has the right to sue for debt recovery within this period from the date the payment became overdue.
When Does the Statute of Limitations Begin?
The countdown for the statute of limitations begins from the day the debtor was supposed to fulfill their obligation (e.g., make a loan payment), or from the day of the last payment, if the debtor partially repaid the debt.
Statute of Limitations for Penalties and Fines
The statute of limitations for accrued fines and penalties is one year (Article 258 of the Civil Code of Ukraine).
Can the Statute of Limitations Be Extended?
The statute of limitations may be interrupted if:
- the debtor acknowledges the debt (e.g., makes a partial payment or signs a new restructuring agreement),
- the creditor files a lawsuit in court.
After an interruption, the statute of limitations restarts.
What Happens If the Statute of Limitations Expires?
If the statute of limitations expires, the creditor can still file a lawsuit, but the debtor has the right to submit a motion to apply the statute of limitations. In such cases, the court may refuse to enforce the debt collection.
Debt Collection Lawyer
A debt collection lawyer can assist with the following issues:
- Reviewing the loan agreement for violations or unlawful terms.
- Analyzing accrued debt (fines, penalties, interest).
- Evaluating the possibility of applying the statute of limitations.
- Negotiating with the bank or debt collectors.
- Arranging debt restructuring (reducing payment amounts, extending the loan term).
- Resolving the issue without court involvement to avoid additional costs.
- Filing complaints against unlawful actions of debt collectors.
- Legal defense in court, including preparing objections to the bank’s claim, challenging unlawful penalties and fines, using the statute of limitations to avoid enforcement, protecting against asset seizure and forced collection.
- Assistance in enforcement proceedings, including verifying the legality of enforcement actions, challenging asset or account seizures, arranging installment payments or postponement of court-ordered payments.
Conclusion
By seeking assistance from an experienced lawyer, you can avoid legal proceedings. However, if a case has already been initiated, it is even more crucial to act only with legal support. Iryna Sydorova can assist in resolving debt collection cases effectively.
