Abstract

The legislative solutions concerning the costs of enforcement by a bailiff introduced in 2019 pose a threat to the correct functioning of the market for collection of mass-scale small debts. As provided by those solutions ineffectiveness of enforcement carried out by a bailiff leads to charging the creditor collection company with a lump-sum fee. Such fee is charged on each unenforceable debt, which in the situation when collection companies manage small debt portfolios made up of at least tens of thousands of individual debts generates a significant risk of bearing extremely high costs. In particular, when buying hard to recover debt portfolios on the secondary market from financial institutions and operators of mass-scale services a collection company is unable to predict what percentage of the debt portfolio will be considered unenforceable by a bailiff. The article points out that those regulations infringe a number of constitutional principles, whereas the functioning of such legislative solutions in legal transactions seriously threatens the operation of the mass-scale small debt management and collection sector, and thus will adversely affect the functioning of the entire financial sector, in particular, by making consumer loans significantly less available for less well-off clients. The solutions are also axiologically defective. They actually constitute a legislative encouragement not to repay small debts and encouragement for bailiffs rendering services to collection companies to give up enforcement of small debts since the multiplication of an individual amount of the lump-sum fee charged on a collection company by the number of individual debts the bailiff gets from the company for enforcement yields a considerable sum total of the fee collected in fact for having waived active enforcement. Moreover, the fee constitutes an untaxed public law budget receivable. Therefore, we deal with a legal construction of a public duty imposed on a creditor collection company for the fact that the bailiff’s enforcement efforts have proved ineffective. Such legislation is irreconcilable with the constitutional standards applicable under the rule of law.