Debt settlement and resolution of disputes between customers and banks or microfinance organisations.
Banking mediation is a negotiation between a borrower and a creditor with the help of an independent intermediary. The creditor may be a bank, a microfinance organisation or a debt collection agency to which the right of claim has been assigned. A lost job, an illness or a drop in income — and a monthly payment that was affordable only yesterday becomes an unbearable burden. As arrears grow, contact with the creditor often comes down to demanding phone calls, and the borrower stops answering. Mediation helps bring the conversation back onto a constructive track and find a way for the debt to be repaid within a time frame that is realistic for the person. The procedure is based on the Law of the Republic of Kazakhstan "On Mediation", and where court proceedings have already begun, settlement is possible under the rules of the Civil Procedure Code.
For the borrower, recovery through the courts means enforcement proceedings, possible travel restrictions, the freezing of accounts and assets, and additional costs. For the creditor, court means time, expense and uncertainty: obtaining a judgment does not mean getting the money if the debtor has nothing to recover from. Mediation allows both parties to avoid these costs. The borrower gets a clear schedule that matches their income, and the creditor gets a real chance of recovering the funds. Negotiations are calmer than dealing with a collections department, and information about the person's financial situation does not go beyond the procedure.
The mediator represents neither the bank nor the borrower. The mediator is not entitled to guarantee that the creditor will agree to write off the debt and does not decide whether penalties have been lawfully charged. The mediator's task is to build a dialogue, help the parties exchange information and check whether the proposed schedule can realistically be met. The mediator's impartiality is especially important when one party is a large financial institution and the other is an individual with no legal training: the mediator makes sure that the borrower understands the terms being discussed. If the mediator has previously worked for the creditor or is connected with it, they must disclose this.
The settlement agreement sets out the amount of debt acknowledged by the parties, the new payment schedule, what happens to the penalties, the steps to be taken in the event of further arrears, and the terms relating to the pledge. On that basis, the creditor often draws up a supplementary agreement to the loan agreement in line with its internal procedures. If the dispute is already before a court, the parties may conclude an agreement and submit it to the court; once it is approved, the proceedings are terminated, and if the schedule is breached, the creditor is entitled to seek compulsory enforcement. That is why you should only agree to a schedule you will genuinely be able to keep to.
Mediation does not oblige the creditor to make concessions: if the bank sees no possibility of changing the terms, no agreement may be reached. The procedure does not replace mechanisms expressly established by law, such as the borrower's application to the bank to change the terms of the agreement, or the procedures for restoring the solvency of individuals and personal bankruptcy. Mediation is not suitable for challenging actions that show signs of fraud — these are matters for law enforcement. If there are many debts owed to different creditors, it is sometimes wiser to obtain legal advice on a comprehensive solution first.
A hypothetical example: a sole trader took out a consumer loan secured on a car, and six months later lost a major client. The payments stopped, the bank began preparing a claim and insisted on repossessing the car, which the entrepreneur needed for work. In mediation, the borrower presented contracts with new clients and a forecast of future income. The parties agreed on a six-month period of reduced payments followed by a return to the full schedule, and on a partial reduction of the accrued penalties provided the new schedule was adhered to. The car remained with its owner, and the bank obtained a clear plan for recovering its funds.
In the registry of professional mediators on the portal, select "Banking mediation" and your city. Pay attention to the mediator's experience in credit disputes and their understanding of how financial institutions operate. Many mediators conduct negotiations remotely, which is convenient if the creditor's head office is in another city. Submit an online application stating the creditor and the approximate amount of the debt — the mediator will contact you and discuss the possibility of inviting the creditor to negotiate.
This material is for reference only and does not constitute legal advice. Please check with a mediator whether mediation is appropriate for your particular situation.
