Round table on the draft of the consumer bankruptcy law

On 11th of February 2015 at 10 am, CRP Sisak participated in a round table discussion on the Draft of the Consumer Bankruptcy Law.

The discussion was also attended by representatives of the Ministry of Finance – Tax Administration, of the Ministry of Economy, Ministry of Labour and Pension System, Croatian Banking Association, Financial Agency (Fina), Croatian Bar Association, Croatian Notaries Chamber, Croatian Employer’s Association, ‘Potrosac’ – Croatian Consumer Association, Franc Association, Croatian Mediation Association, Union of Autonomous Trade Unions of Croatia and Association of the Blocked.

The round table was initiated with the speech of the Minister of Justice Orsat Miljenic, who announced that the Law is to ensure overdue citizens with an opportunity for a new, more responsible start. The goal is achieving of balance; giving a pass to overdue citizens, and at the same time increasing the payment, since the debt has to be returned. The minister Orsat Miljenic stated that the consumer bankruptcy was perceived as the final step that would give debtors the way out of debts, since the debts would be partially deducted by creditors. However, in the case of not returning debts within the five-year bankruptcy period, the debtors would be left out without their property, including residential real estates. So called ‘personal bankruptcy’ is possible to be required by ones who for at least 3 months were not able to repay their debts higher than 30 000 kuna, as well as ones who are self-employed, have no more than 20 creditors and their debts do not transgress the amount of 100 000 kuna. The minister pointed out that this kind of measurement would, despite being challenging and difficult, ensure many debtors the way out from debt bondage. As a ‘solidarity gesture’, debts will be partially repaid from the state budget.

In the Ministry, it is being expected that the majority of bankruptcy cases will be solved by out of court proceeding through counselling of the Financial Agency (Fina) that would be a mediator in the agreement of consumers and creditors. In the case of non-occurrence of an out of court  agreement, a municipal court proceeding would be the following step, which would, after a preliminary hearing, be decisive in regards to a proposal for deliverance of debtor’s commitments. If the debtor has any property, an appointed trustee would be able to manage and encash the property in order to satisfy a creditor. However, the Ministry has warned that the dignity of a consumer has to be taken into account, and that he/she must be left with a sufficient amount of money to ensure his/her basic living needs as well as housing requisites.

The minister has summed up his presentation with the following: the state will annually allocate approximately 5 million kuna for the project.

Upon the held meeting and the presented Draft of the Consumer Bankruptcy Law, another discussion of participants of the round table was held. We present some of them:

Antun Rupa, a representative of the Association of the Blocked has pointed out the fact that the law in question predicts expenses which the debtors are not able to pay back. He stated the following: ‘if you have some money on your account, a bank pays in 0,10 % of interest rates on it, while at the same time the debtors have to pay a default interest rate of 12%’.  Precisely because of that, many see a suicide as a solution, Antun Rupa concluded.

Ilija Rkman, a representative of the Croatian Consumer Association has suggested that alongside of the proposal of the law which is being presented as a possibility of a new ‘responsible start’, it is necessary to conduct a comprehensive research to show how many people in Croatia got sick under debts pressure.

The director of the Croatian Banking Association Zoran Bokacek believes in the quality of the proposal, which took long time to be composed, due to the difficulty of finding a measure that satisfies both sides. However, he criticized the government for non-comprehensive approach to outstanding debts, but rather solving the problem by delegating the issue to other ministries, which resulted in the presentation of special projects by, for instance, the Department of finance and social welfare prior to the proposal of the Draft of the Consumer Bankruptcy Law. Bohacek concluded that bankruptcy was an ‘undesired outcome’ and it should not be a goal for a large number of people.

The representative of the Croatian Bar Association Mladen Klasic has suggested that ‘there is no place for euphoria’ when it comes to bankruptcy of consumers, since it is a hardly achievable goal that ultimately will not solve the situation of debtors.

We would like to point out that the public discussion about the draft of the Consumer Bankruptcy Law will last up to 28th of February.

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