Payday lenders do not fear collapse after courts stop processing payment orders

€50 bills. Source: Ken Mürk/ERR

Quick loan providers are not directly predicting a collapse in business following the suspension of expedited payment orders and say they are ready to adapt to the new process. However, they are calling for clear and automatic checks to assess responsible lending practices.

In expedited payment order proceedings, a creditor can recover debts under €8,000 — including interest and fees — faster than through litigation.

However, courts say that consumer credit claims are not well suited to the expedited process. The procedure does not allow for an assessment of the substantive merits of a claim and judges have noted that many loans reaching this stage fail to meet the principles of responsible lending. In full litigation, judges can review evidence and request further clarification.

Courts are required to decide on applications for expedited payment orders within 10 working days. If granted, the debtor receives a payment proposal. The debtor may file an objection, in which case the matter proceeds through standard litigation.

Issuing loans based on registry checks is straightforward for small amounts, but the introduction of additional checks and a longer process could call the viability of the quick loan business model into question.

More read: ERR.EE

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