The Constitutional Court Rules Against Homelessness

An apartment or a house used as collateral for a consumer credit is exempt from debt collection if this property is the only place where a debtor can live, rules the Constitutional Court of Russia.

The Constitutional Court has handed down a ruling that the ban which exists in Russian law on the foreclosure of a debtor's only home complies with the Constitution.

Nomos RegionBank applied to the Constitutional Court challenging the constitutionality of the provision in the Code of Civil Procedure which forbids taking property if this is the only place where the debtor and his/her family can permanently live. The court has found that though there is nothing illegal in giving such property as a security for a loan, the ban is the guarantee of normal existence to people in trouble.

The Constitutional Court has specifically mentioned that the prohibition does not apply to the mortgaged property. Such premises can be collected if the debtor fails to pay on time.

RussianLawOnline.Com wrote about predatory practices in Russian lending business. Though the court’s decision may seem a bit harsh to banks, they should remember that their job, fundamentally, is not the multiplication of homelessness.

It is hard to believe, but today – in the year 2012! – Russia does not have a law on bankruptcy of individuals. In a country, where interest on a consumer loan can reach thousands percent a year and the lending business is effectively unregulated – newspapers are clogged with advertisements of easy loans from various entities – someone had to say: ‘Back off!’