How the Law Protects Debtors from Illegal Actions by Collectors

The modern financial market cannot function without debt collection agencies. However, along with their presence came new challenges — aggressive phone calls, psychological pressure, and even intimidation. That is why, in 2021, Ukraine adopted the so-called “Anti-Collector Law” No. 1349-IX, which set clear rules: who has the right to demand repayment, how communication with debtors should occur, and what boundaries collectors must not cross.

The Law and Its Limits

The law stipulates that only a creditor or a collector company registered with the National Bank of Ukraine has the legal right to demand debt repayment. Any organization that is not listed in the official Register has no such authority — its demands are legally null and void.

Collectors are not government authorities. They cannot seize property, ban travel abroad, or forcibly recover debts. The only legitimate way to enforce repayment is through a court decision executed by a state or private bailiff. Any other form of coercion is a direct violation of the law.

Common Violations and Court Practice

Despite the legal framework, many collectors continue to operate outside the law. The most frequent violations include psychological pressure, threats, harassment by phone, and disclosure of debt information to third parties. Such actions fall under several articles of the Criminal Code of Ukraine — from extortion (Article 189) to coercion to perform obligations (Article 355).

Another serious offense is unlawful disclosure of personal data. When collectors contact a debtor’s relatives, neighbors, or colleagues, they infringe on the right to privacy. Ukrainian courts have already issued rulings recognizing such actions as unlawful, holding companies administratively and even criminally liable.

A further common tactic is impersonation, when collectors present themselves as “bank security officers” or “state enforcement authorities.” Courts classify this behavior as deceptive business practice, prohibited by law.

How Debtors Can Protect Themselves

Debtors are not defenseless. Ukrainian legislation provides several effective tools for protection:

• Complaint to the National Bank of Ukraine. The NBU supervises collector companies and can fine them or remove them from the Register. A complaint may be submitted online with supporting evidence such as call recordings or screenshots.
• Filing a police report. If the collectors’ actions include threats, coercion, or attempts to enter a home, the debtor should immediately contact the police. Law enforcement is obliged to register and investigate such complaints.
• Judicial protection. Through the courts, debtors can have unlawful actions declared illegal, claim moral damages, or dispute improperly calculated debts.

Court practice demonstrates that a single well-prepared lawsuit is often enough to stop unlawful collector activity and force companies to act strictly within the bounds of the law.

Restructuring and Bankruptcy — Legal Ways Out

If the debt is genuine, it can be resolved legally. Restructuring allows for renegotiating payment schedules or reducing monthly installments. Meanwhile, personal bankruptcy is a legitimate judicial procedure that can eliminate overwhelming debts and offer a financial fresh start.

Conclusion

Collectors may be part of the legal system, but they are not above the law. A debtor who knows their rights can defend themselves effectively. The state has provided the necessary mechanisms — it’s now up to citizens to use them.

The law stands with those who are not afraid to know it.