Playing By No Rules

"As a rule, small sums [owing in debt] are involved in these cases, and it is easier to recover them by physical force."
"It is easier to frighten people than to sue them."
Danila S. Mikhalishchev, debt collector, now consumer advocate, Moscow

"Before, if people did not have the money to pay off a loan, they could go to another bank."
"That does not work any more."
Alexander A. Akhlomov, United Credit Bureau

"They should be handcuffed [collection agents], so they won't beat anyone, won't rape anyone or won't burn anyone."
Vladimir Zhirinovsky, populist opposition politician, Moscow

"I'm now aware that when a call comes from those collectors, I shouldn't show them that I'm afraid."
"The faster you show them that you're afraid of something, the more dogged they become."
Evgeny O. Sharov, 26, singing teacher, Tolyatti, member of Stop Collector

Ilya Kutoboy

Debt collectors are not generally, and never have been very nice people. It's a tough, rough, industry. And wherever collectors have been authorized to operate they have been despised and reviled for their methods of intimidation and threat. For the most part intimidation has been intimated; rarely, unless they're part of a criminal underground pursuing criminal debtors, resorting to actual violence. They are, however, considered a social scourge, preying on people's insecurities.

Most people do feel obligated to pay back their debts, as a point of honour. If, in most modern societies someone fails to do so, that person will also find it difficult to get credit in future when it is needed. So scrupulous attention to repaying loans to establish a good credit rating is an obvious necessity, both for business and for private individuals.

Still, much of the world went through difficult times in the most recent recession, and the world of economic misfortune is still re-adjusting to the 2008 financial meltdown that affected much of the globe. There is a lot of residual unemployment, and markets are tight. Manufacturers are not reinvesting as they should and a lot of people are feeling the pinch.

That pinch has resulted in a new wave of debt collectors whose methodology has become quite simply criminally violent. Where people have been humiliated and stripped, threatened, sexually abused, done harm to children through firebombing homes. A new Russian type of debt collection appears to be flourishing while the nation is struggling with economic turmoil. Russia is experiencing its own national recession.

People are struggling to survive and being forced to borrow money to take them forward into a future they hope will turn out more assured than the present. But because astronomical interest rates are being attached to that borrowed money, they find themselves even deeper in trouble, unable to pay back their debts. The amount of unpaid debt in 2015 increased by close to 50 percent to $15-billion.

If no repayments are made for three consecutive months the borrower is considered to be in default, according to Alexander Akhlomov of the  United Credit Bureau. Since March alone of last year the number of people in default has risen to 7.5 million. At the same time, in the same year, real wages declined ten percent reflecting the drop in the global price of oil, a weak ruble and economic sanctions imposed over Ukraine.

Russians now spend over half their income on food, beverages and cigarettes. Credit has been tightened in banks leaving fewer options to people living from one paycheck to the next. The microfinance industry is thriving. Loans averaging $125 come with an interest rate of close to 2 percent daily. That translates to 730 percent annually. Failure to pay on time results in abusive telephone calls.

Collectors threaten people, and if there is no reaction leading to payment of debts, the thugs move in once the debt balloons thanks to the exorbitant interest rate. People's homes are invaded by masked debt collectors who beat the home owners even while they are demanding repayment of them. Representatives of collection agencies deny that they indulge in any such criminal activity suggesting that unallied 'black' collectors are responsible.

When violence doesn't take place it's sheer intimidating tactics that break down people's peace of mind. Collectors telephone around the clock, up to 150 times daily, hounding families, friends and business associates of the debtor. The collection industry is unregulated, often fired police officers are collectors along with prison or security guards, where up to 40 percent of unpaid debts wind up in their hands.

There have been occasions when schools have had to evacuate classes when collectors threaten to blow classes up. The victims who are the targets of these violent, unscrupulous menaces are often poor and uneducated. Their reaction is to be fearful of what comes next. They have no idea that most courts will simply clear out the ballooning interest as illegal. People are left to defend themselves against what they feel helpless to defeat.

"This year we're going to launch mobile anti-collector squads", stated Alexander Naryshkin. For a small fee, muscular men will arrive on the scene and make their presence known to collectors. "If they don't get it the first time, the second time we apply physical force. After the second time, I think they'll understand", asserted Mr. Naryshkin, administrator of Stop Collector, an online forum for victims of collectors offering support and advice to the 90-120 pleas for help received daily.

His intention is in self-defense, he will initiate a system that meets force with force. Pretty scary stuff.
Images of gang war surface alarmingly.