Outcry over simplified bankruptcies plan
28. 6. 2016 | Source: BusinessInfo.cz
Lawyers and credit providers are up in arms over the justice ministry's latest planned new rules for governing personal bankruptcies. They are designed to make it easier for small debtors to declare bankruptcies.
"In line with models seen abroad, one main objective is to make debt relief accessible to a greater pool of debtors. One proposal under consideration is the removal of the minimum debt repayment requirement necessary for qualifying for debt relief," said justice ministry spokesperson.
According to the rules currently in place, a debtor under a personal bankruptcy regime must repay at least 30 percent of their total debt over a five-year period. If the plans of justice minister Robert Pelikán (ANO) come to fruition this threshold would no longer exist. The overall debt relief period would also be extended. However, a ministry representative pointed out that this was presently no more than a working proposal. Working proposal or not, it has caused a real stir. "The 30-percent threshold and the five years to repay at least that share of the total debt are [parameters] perfectly comparable to requirements in place in neighbouring countries.
I can see no reason to change them. If the threshold is removed what would remain to motivate debtors to repay any of their debt?" asked Bystrík Bugan, a lawyer who specialises in bankruptcies. He also prioritised the need to make sure that any new rules would only affect debts incurred after the new bankruptcy legislation came into force. Non-banking credit companies were also not exactly enthused by the proposal. "The institute of bankruptcy is already being abused. Implementing this proposal would simply aggravate the situation," said Ondřej Holoubek, a spokesperson for Provident Financial.
Originally published in E15 weekly, economic and business newsmagazine. Author: Daniel Novák