The right of pledge in Bulgaria
For safeguarding a claim, a pledge may be created on movable property or the claim itself. Pledges may be created for own as well as for another persons’ obligations/liabilities. The right of pledge is an accessory right – it appears and disappears with the transfer of the safeguarded claim. If the obligation/liability is divided between the debtor’s heirs, the rights of pledge strains the entire obligation or all objects even if they have been divided between the heirs. If the pledge safeguards another persons’ obligation, the owner of the pledged objects may hold all of his objections out to the creditor as well as he may offset the debtor’s claims.
Agreements made in advance, including the transfer of ownership in case of non-performance as well as other agreements that have been made unlawfully in advance serving the creditor’s satisfaction are void. If there are several rights of pledge created regarding the same object, the creditors will be satisfied in the order of the creation of their rights of pledges and mortgages even if the secured claim would not have arisen with its creation. If objects pledged for purposes of the community or the state vanish, get damaged or alienated, pledges get satisfied preferably from the insurance sum or the respective collaterals.
The performance towards the owner is effective if the pledge’s owner has been exhorted by the insurer or the person that owes the security and if the pledge’s owner did not make objections during a time period of 3 months. If the debtor transferred the pledged object to a third party and the recipient paid or became subject to an execution, he (the recipient) obtains the rights of the satisfied creditor towards debtors, guarantors and persons that acquired ownership of objects that have been pledged for the same obligation. The owner that pledged his property for a foreign obligation obtains equal rights. In this case, he obtains the creditor’s rights towards the guarantor to the dimension that he would be eligible against him if he was guarantor.
The right of pledge on movable property
The pledge agreement is only effective if the pledged object is handed over to the creditor or a third party determined by him or the pledger. If the secured claim exceeds the value of 5 BGN, the right of pledge may not be displayed towards third parties unless a written, reliably dated document containing the objects of the claim is present.
The creditor is obliged to store the pledged object until the full repayment of the secured claim. Unless not agreed otherwise, he may not benefit from the pledge. If the custody of the object has been withdrawn, the creditor may lay claim towards the person that is storing the object due to his pledge. Due to impending product spoilage, creditor and pledger are entitled to apply to the district court for public sale permission and to deposit the receipts as security for the creditor at a bank afterwards.
The creditor is entitled to be satisfied primarily by the pledge’s receipts by execution unless he returned the pledge to the debtor. It is presumed that the pledge is returned when it is in his ownership. If the secured claim involves a monetary claim or if there was an agreement upon a fine and if further the right of lien has been justified by a written contract or is provided by the law, the creditor is (due to the contract) entitled to apply for an order for execution according to the regulations of Article 418 of the Bulgarian code of civil procedure. The provisions of this chapter do not repeal other laws’ special regulations concerning the justification and the effect of the right of lien.
Right of pledge on claims
Only claims that are able to be transferred may be pledged. The contract of pledge regarding a claim may not be set against third parties if the pledge has not been displayed towards the debtor; if the secured claim exceeds a value of 5 BGN, the regulations of Article 156 (2) of the law of obligations and contracts applies. The pledger is obliged to hand over the documents verifying the pledged claims (if existing) to the pledge. The creditor owning a right of pledge on claims is obliged to perform any necessary actions serving its maintenance. He is obliged to collect the interests of the pledged claims and at the time of maturity he must also collect the principal sum. The just mentioned receipts remain with the creditor. As security for the creditor, amounts of money are kept safe in a bank.
The creditor that owns a right of lien on claims is entitled to apply for an order for execution according to Article 418 of the code of civil procedure and also to be satisfied primarily according to the provisions of reversion of performance (Article 160).