There are situations when a person borrows money, but for various reasons is unable to repay it within the specified period. In such cases, the creditor may try to recover the debt himself or transfer this task to another person – a debt collector. If a person is contacted about debt repayment by a creditor other than the one with whom the contract was originally concluded, or if a debt collector begins to act on behalf of the creditor, questions often arise about the lawfulness of data processing. The Inspectorate regularly receives questions from citizens about whether the transfer of their data to another person in such cases is legal.
Find the answer in this explanation!
Cession
One way in which a person can find themselves in a situation where someone other than the original creditor is approaching them for debt recovery (and therefore processing their data ) is through an assignment of claim. This means that the original creditor has transferred their rights to receive repayment of the debt to another person, who thus becomes the new creditor.
Jānis has borrowed 1000 euros from Andris, agreeing that the money will be returned in a month. In the meantime, Andris himself gets into financial difficulties, but he is still unable to recover the loan from Jānis. Therefore, Andris assigns* this debt to Pēteris, receiving money for it immediately and transferring to him the right to demand repayment of the debt. When the repayment deadline arrives and Jānis delays it, Pēteris contacts him, using the phone number specified in the loan agreement, about repaying the debt.
The law stipulates that an assignment agreement between the assignor of a claim and its recipient may be concluded in any form. The consent of the debtor against whom the claim is directed is not required, and the assignment is valid even if he is unaware of it [1] . Consequently, in this case, before the assignment and the transfer of the debtor’s data to the new creditor, the debtor as a data subject does not necessarily have to be informed about the transfer of his data to another person. If a lawful assignment of the debt has taken place, the new creditor is entitled to process the debtor’s personal data to the same extent as the previous creditor would have done in order to obtain repayment of the debt. Such processing of data will be lawful.
At the same time, the debtor has the right to request evidence from the new creditor that confirms that his debt obligations have indeed been assigned.
Extrajudicial debt collection on behalf of the creditor
A creditor may also retain a debt obligation for itself by authorizing a service provider, that is, a person who, as part of their professional activities, collects the debt on behalf of or on behalf of the creditor. [2]
Since Jānis has not paid Peter’s debt for several months and Peter is busy with other work to recover the debt, he turns to the out-of-court debt collection service provider SIA “Atdod”. He provides SIA with information about the debt, identifies the debtor Jānis and instructs it to recover the debt on his behalf. SIA “Atdod” initiates debt collection by sending Jānis a written request to pay the debt to the address specified in the loan agreement.
National legislation provides that one party has the right to authorise a third party to perform a certain task on its behalf. [3] The law states that a creditor may instruct another person to recover a debt on its behalf. In such a case, the transfer of data is lawful, and the legal basis for it is the legitimate interests of the creditor . [4] At the same time, when carrying out extrajudicial debt recovery, service providers must act only to the extent specified in the authorisation given to them (this also applies to data processing). The procedure for communicating with the debtor set out in the Extrajudicial Debt Recovery Act must also be observed.
- We invite you to read more about extrajudicial debt recovery in the explanation of the Consumer Rights Protection Center – https://www.ptac.gov.lv/lv/paradu-arpustiesas-atgusana .
- In turn, we invite you to read the explanation prepared by the Inspectorate regarding the processing of personal data in extrajudicial debt recovery databases – https://www.dvi.gov.lv/lv/jaunums/dviskaidoro-personas-datu-apstrade-paradu-arpustiesas-atgusanas-datubazes
We also remind you that in cases where personal data is processed, the person whose data is being processed (in this case, the debtor) has the right to contact the organization that contacted them about debt collection to clarify the purpose and legal basis of this data processing. We invite you to read more here: https://www.dvi.gov.lv/lv/jaunums/dvikaistro-DST