Bulgaria: new Consumer Credit Act

On 12 May 2010, the new Consumer Credit Act came into force, bringing Bulgarian law into line with EU consumer credit law.

The most significant changes are:

• it will apply to consumer loans of from BGN 400 to BGN 147,000 (c. €200- c. €75,000)
• consumers must be given preliminary information about the credit terms in a standardised form (following the Standard European Consumer Credit Information form)
• the consumer credit agreement must now specify key terms, including (for each interest rate, where different rates apply in different circumstances) how the rate applies, whether it follows an index or other reference rate and the periods, conditions and procedures for changing it
• consumers must be notified in advance of any change in the interest rate coming into effect
• before they are allowed to borrow, consumers’ creditworthiness must be evaluated on the basis of sufficient information, including information obtained from the consumer and, where necessary, from the Central Credit Register or other relevant database used in Bulgaria; and the information on their creditworthiness will also be available to foreign lenders
• there are new rules on the form and content of consumer credit adverts requiring them to indicate the interest rate or charges for borrowing
• consumers will be entitled to terminate a credit agreement without needing to give a reason within 14 days of the date they signed it or were given the prescribed statutory information about its terms. The agreement terminates as soon as the consumer has given notice and repaid the loan plus any interest accrued to termination, but no other charges may be imposed
• consumers can repay the loan early in full or part, which will entitle them to a reduction in the total cost of borrowing, including interest and costs for the remaining credit period. If they repay early under a credit agreement with a fixed interest rate, their subsequent cost of borrowing must be fair and objective and no more than the total interest they were due to pay between early repayment and the agreed termination date

• Law: Consumer Credit Act (State Gazette, Issue No. 18 of 5 March 2010); implementing Directive 2008/48/ЕC on Credit Agreements for Consumers and repealing Directive 87/102/EEC