The Armenian government, through Resolution No. 1990-L, has launched an initiative to support citizens with non-performing loans and stimulate their economic activity. The resolution introduces a temporary measure to reduce wage garnishment, allowing individuals to retain a larger portion of their income.
The core of the initiative is a reduction in the percentage of salary garnished. Under the program, garnishment will be capped at 20% of the debtor’s salary or equivalent payments, unless a lower rate is already legally mandated or specified in the enforcement order. Eligibility criteria include: the loan must have been classified as non-performing (for at least 3 years) by a commercial bank or credit organization licensed by the Central Bank of Armenia as of February 1, 2025; the total principal of the non-performing loan(s) must not exceed 1,000,000 dram (or equivalent foreign currency) at the time of application; the individual must be a registered employee at the time of application, according to information in the “Personalized Accounting System of Income Tax, Profit Tax, and Social Payment”; and an application must be submitted to the Unified Social Service between February 1, 2025, and January 31, 619, only once, either online via e-social.am or in person at any regional branch of the Unified Social Service.
The Unified Social Service will begin compiling a list of eligible individuals daily, starting from the 5th working day after the resolution comes into force (February 7, 2025). This list will be sent to the Compulsory Enforcement Service, which has three working days to implement the 20% garnishment limit. The new 20% rate will be applied to beneficiaries from the 1st of the month following receipt of the list by the Unified Social Service and will remain in effect for 24 months.
The initiative aims to address the problem of non-performing loans, which can trap individuals in a cycle of debt and hinder economic participation. By reducing the amount of income withheld, the program seeks to increase disposable income for those struggling with debt, encourage economic activity among individuals with non-performing loans, and provide temporary relief for those in difficult financial circumstances. The Unified Social Service is responsible for receiving applications, determining eligibility, and compiling the beneficiary list, while the Compulsory Enforcement Service is responsible for implementing the reduced garnishment rate.
This government resolution is a targeted effort to assist individuals with non-performing loans by temporarily reducing wage garnishment. The program is designed to balance the need for debt repayment with the need to encourage economic participation. The limited application period and specific eligibility criteria make this a temporary measure aimed at providing much-needed economic support to a vulnerable segment of the population.