To Write Off or Not to Write Off: The Debt Dispute Reaches the Constitutional Court 0 908

The contested provisions stipulate that under certain conditions, an individual may be relieved from part of their debt obligations. For this, the person's income and the amount of debt must meet the limits established by law, and the debtor must fall under one of the specified social criteria.

However, companies engaged in purchasing debts and their out-of-court collection believe that after the legislative changes, the circle of people eligible for debt relief has been significantly expanded.

According to the claimants, this has led to a substantial decrease in the value of their debt portfolios.

"We Bought These Debts at Market Price"

Collection agencies indicate that they acquired the rights to claim from specific debtors at market price. They proceeded from the assumption that the Law on the Relief of Individuals from Debt Obligations would not apply to these debts.

In the opinion of the claimants, the current regulation does not guarantee that debts will be written off exclusively for those individuals for whom such a measure is truly necessary.

As a result, the collectors believe that the legislation disproportionately restricts the property rights guaranteed by the Constitution and violates the principle of protecting legal trust.

Rules Significantly Changed in 2025

Amendments to the Law on the Relief of Individuals from Debt Obligations came into effect on January 21, 2025. They significantly expanded the circle of residents who can claim debt relief.

Now, the Constitutional Court must determine whether such regulation is in accordance with the Satversme.

The case is being considered in a written process. A decision must be made within 30 days after the session of the Constitutional Court.