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Lawyers: loan interest rate to become more predictable for borrowers

Kyiv. October 13, 2011

Following the changes recently adopted in the legislation, when signing a loan agreement a borrower will immediately get to know whether an interest rate is to be varied and what a rate movement procedure is. This will make an interest rate more foreseeable for borrowers.
This comment on Law “On changes introduced into certain laws of Ukraine as regards the protection of the rights of lenders and financial services consumers” No. 7351 adopted by the Verkhovna Rada  of Ukraine was given by Roman Drozhanskyi, Partner with Volkov&Partners.
“The Law contemplates a possible establishment of a fixed rate tied to a certain public index. As such, borrowers will chance to foresee easier an interest rate. Moreover, lawmakers determined that the index-related movement procedure of the fixed rate has to be negotiated just in the loan agreement”, the expert explained.
Furthermore, Mr. Drozhanskyi mentioned that the Law actually removed a possibility to declare a sole proprietor a bankrupt, which earlier often resulted in recognition of all its liabilities redeemed. Now a liquidation estate in a case on such sole proprietor’s bankruptcy will just include liabilities assumed by such individual as an entrepreneur.
In addition the lawyer pointed out that the Law, after all, does not stipulate a possibility to recognize an individual - non-entrepreneur a bankrupt.
“Such lacuna bears out that the Ukrainian legislation leaves much to be substantially developed and makes it impossible to apply a financial sanation procedure to individuals, which is widely envisaged by laws of many foreign states”, Mr. Drozhanskyi summed up.
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