A bank or MFO sued me over a loan: what to do under Georgian law

What to do

1. Deadlines first: the response to the claim (შესაგებელი) must be filed within the period set by the court, no more than 14 days (21 days in complex cases). An extension is granted only for a good reason (Civil Procedure Code of Georgia, Art. 201). If the deadline is missed without a valid reason, the court may issue a default judgment without an oral hearing, if the grounds of the claim are legally well founded (Art. 232¹). A default judgment may be appealed within 10 days of service of its copy (Art. 237). It is set aside if the non-appearance or non-filing was caused by a good reason that could not be reported in time (Art. 241).
2. The response: each circumstance of the claim must be contested with reasons, or the point cannot be disputed later (Civil Procedure Code of Georgia, Art. 201). All evidence must be attached to the response, otherwise the right to submit it later is lost (Art. 201). Attach the contract, the schedule, all payment receipts and your own counter-calculation.
3. Recalculate the claim. The effective annual rate on a loan must not exceed 50%, for any loan including those from banks and MFOs (Civil Code of Georgia, Art. 625). Penalties and other sanctions must not exceed 0.27% of the outstanding principal per day (Art. 625). For banks and MFOs, the National Bank may set other rules for sanctions, though not for the rate; check against its regulation (Law on the National Bank of Georgia, Art. 64¹). Expenses not included in the annual rate are not reimbursed (Civil Code of Georgia, Art. 868). A manifestly excessive penalty may be reduced by the court (Art. 420). Separate the principal, interest, penalties and fees.
4. Limitation: the limitation period for contractual claims, including periodic payments, is three years (Civil Code of Georgia, Art. 129). Expiry of limitation gives the debtor the right to refuse payment, and this must be raised in the response (Art. 144), so count separately for each payment. Partial payments and acknowledgement interrupt the period.
5. In parallel, negotiate. The court must assist the parties in reaching a settlement, such as instalments or waiver of sanctions (Civil Procedure Code of Georgia, Art. 218).
6. Where to apply: the district (city) court or magistrate, by written response to the court registry or through the court’s electronic system. The National Bank of Georgia supervises banks and MFOs.
7. Evidence: loan contract and schedule; payment receipts and statements; correspondence with the creditor and collectors; copy of the claim with its date of service; your own calculation.
8. Traps: ignoring the claim leads to a default judgment and then enforcement; general objections without a counter-calculation or attached evidence; failing to raise limitation, which the court does not apply on its own; signing a settlement that keeps the same inflated sanctions.

Be sure to check

• the deadline for filing the response (შესაგებელი) set by the court and the risk of a default judgment; the deadline for appealing it
• the response must contest each fact and include all evidence
• check the calculation against the lawful caps on the rate and sanctions; reduction of an excessive penalty
• limitation must be raised in the response; settlement and instalments