Second round table discussion on the draft of the consumer bankruptcy law

Civil Rights Project Sisak took part at the second round table entitled “Draft Proposal of the Consumers Bankruptcy Law” on 9 June 2015, at 10:00 in the premises of the Ministry of Justice.

Other stakeholders of the round table were representatives of the Ministry of Finance – Tax Administration, Ministry of Economy, Ministry of Labour and Pension System, Croatian Banking Association, Financial Agency, Croatian Bar Association, Croatian Notaries Chamber, Croatian Employers’ Association, “Consumer” – Association for Consumer Protection, Franc Association, Croatian Alliance of consumers’ associations, Legal Clinic of the Law Faculty in Zagreb, Alliance of Independent Croatian Unions, Croatian Independent Unions and Association of the Blocked.

Proposal of the Consumer Bankruptcy Law, which will be soon sent for second reading, aims to providing of “a new, more responsible start” to overdue citizens. Some associations, although welcoming this measure, fear that it would cause that many people would become poor after the personal bankruptcy and after their property would be sold, said Minister of Justice, Orsat Miljenić.

According to the Minister, in a case where a consumer does not have any assets, the procedure is opened and closed in one day, which means that debtors can theoretically be written off millions of debts, but he or she will be monitored for five years in order to prevent one from possible abuse, as it is, for example, concealment of income or assets.

However, in case where a debtor has only one, existential property he or she may request that property should be exempted from sale in the checking process. The proponent hopes that the debtor will find solution during this period and that there will be no sale of the property. “Decision will be made at the end, because the debtor will be given an opportunity to return part of the money or to enter into a different relationship with the creditor,” said the minister.

It is important to emphasize that citizens themselves voluntarily decide whether to use or not to use the given option. It is up to them, on a voluntary basis, the Minister concluded.

One of the changes compared to the original version of the Consumer bankruptcy law is that the consumer bankruptcy procedure itself will be led by proposed legislation in the non-judicial proceeding within the counselling procedures, through the Financial Agencies and authorized organizations, as well as court proceeding before municipal courts.

The novelty is that the Consumers Bankruptcy Law provides a wider possibility of release of the remaining obligations to the citizens who do not perform economic or other professional activity.

The representative of the Independent Croatian Unions, Katarina Litva told reporters that they were satisfied with their joining to the working group and that quite number of their comments was taken into account, but they were not satisfied with the minimum amount of money that remains to the debtor in bankruptcy. They also demand prolonging of the period within which the debtor would not be taken away (sold) the only one real estate.

According to the current version of the law, it is stipulated that a person under the bankruptcy procedure has a minimum fee of 800,00 HRK per month. However, the union considered the amount too low and advocate that a minimum should be threshold of risk of poverty, or 1.910,00 HRK, which would be revised depending on the number of dependents. They also raise a question on how many people at all would be interested in a personal bankruptcy since they would have to live with 800,00 HRK per month.

As regards to the protection of property, the Union seeks to, following the review process, set a deadline of at least one year in which a consumer will be allowed to find a solution in order to avoid selling of his only real estate. “How to legally regulate to keep a single real estate remained problematic,” said Litva, adding that their opinion is that the only property should not be sold in any case.

A representative of the Association of the Blocked, Sarajko Baksa said that the initiative of the law was commendable. They however fear of the possibility that all blocked, more than 320,000 at the moment, enter bankruptcy law and become a “mass of the Croatian people living in extreme poverty”.

President of the Croatian Association of Consumers Ilija Rkman said that a guide through the pre-trial proceedings have to be published so that citizens would be informed about the procedure itself, especially every stage of it.

He also suggested two things: to organize an open media debate and involving the citizens / TV viewers and to organize trainings in the counselling.

He pointed out that it is important to present all that on the web portals in order to be available to the general public.

“We solve one problem, and that is debt collection, but thus opening a new potential problem and that’s a large number of people who will be living on the poverty threshold because the law allows people who carry out the bankruptcy to sell assets of a debtor. It can happen, theoretically, that because of the debt of HRK 50,00 to stay without everything that you have had. Is that a good start or not, I’d like to avoid such a beginning to start with nothing” said Baksa.

He however concludes that the debts should be paid, but he warns that no one raises the question of their legal validity.

It is expected that the law will be implemented as of the end of this year, but it is crucial to educate the population, courts and commissioners themselves.

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