1. To start a debt collection process we will need power of attorney (POA)
Why we need this and what kind of POA will work for the process?

Recently one of our TCM partners has came to us with a collection case and when we said we need a POA to start the process, this was something unusual for them, that is the reason we would like to clarify some aspects of debt collection in Armenia for our partners and colleagues to render is possible better understanding the collection industry here.

We need this POA provided by the creditor to one of our employees /who will be directly engaged in the collection process / Or if a partner who is referring a client to us /let’s say the Agent/ has a POA from the creditor with the right to re-authorize to the third parties, then the Agent can Also provide us POA. In this case we would also require seeing the original POA provided to the Agent, to state the right of re-authorization.
Why we are asking for this
- Per the code of Advocate's ethics of RA, the attorney shall have a POA to act on behalf of a client, it’s an obligation. While it’s not very often for the debtors to take much attention to this, if they will file a complaint to Chamber of Advocates, then the Attorney will be will be prosecuted by the Chamber.
We understand that this is not the case in most of the countries but those are the regulations acting in Armenia and if the Creditor wants start collection process we must obey the law.
We would need POA for each client. No matters the number of cases, i.e 1 POA for multiple cases.

2. Successful collection requires proper documentation of the debt
Again we would hereby like to speak about another specific aspect for the debt collection in Armenia which distinguishes Armenia from other countries.
It is very important to have documents confirming the debt signed by the Debtor. As such it might serve as an agreement, contract, invoice etc..The key is a signature placed by the debtor on such document, thus it’s greatly minimizes the risk of the fact that the debtor might later return to us with an announcement that products has not been delivered or services were not provided. This becomes more important when we start a court collation, where we also would require documents in hard copies and apostilled according to The Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents.

3. Statute of limitations
The period of limitation for the bringing of certain kinds of legal action to the Court is 3 years in Armenia, since the time debt became due and payable by the Debtor. If a Creditor will miss this period, a Debtor may ask to the Court to implement the statute of limitations and the debt will be acknowledged void by the Court.

Prepared by Attorney at law, Partner at iLex Law Firm Armenia
Mr. Shavarsh Petakchyan