Personal bankruptcy is for the patient and disciplined

Personal bankruptcy is not part of domestic financial regulation, although it is used in most developed financial markets as one of the ways to resolve citizens’ financial problems, but as a last resort, a very serious and long-term instrument that can be unpleasant for the debtor, it was emphasized at the round table ‘The Role of Personal Bankruptcy in the Financial Market’ organized by the association ‘Life in the Plus’.

Therefore, those who declare personal bankruptcy must reckon that for many years they will have to patiently, disciplinedly, and under guardianship repay their debts and that during this period they will not be able to use most services of the financial industry such as loans, borrowings, and overdrafts, warns the director of the Croatian Banking Association, Zoran Bohaček. He adds that personal bankruptcy is a last resort for debt collection used when all other options such as a reprogramming agreement or a moratorium have been exhausted. Commenting on the current Croatian solution from the Enforcement Act, according to which a debtor must be left an amount equal to one-third of the average salary in Croatia during enforcement, Bohaček assessed that it protects the debtor, not the creditor. According to the data he presented, the Croatian credit obligation register recorded 2.8 million names with an associated credit obligation, of which between 97 and 98 percent regularly meet their obligations.

He presented the French example where there are over-indebtedness commissions in departments (counties), which consider individual cases of citizens’ insolvency and propose a debt repayment plan, and personal bankruptcy is a last measure decided by the courts on the recommendation of the commissions. The Slovenian solution was also presented at the meeting, according to which personal bankruptcy can be initiated in court by the debtor or creditor. If the court decides to initiate bankruptcy, it appoints a guardian for a period of 3 to 5 years who ensures debt collection from the debtor’s entire property. This is also a time of trial in which the debtor must find employment and two-thirds of their income is taken. After the term expires, the guardian proposes to the court the forgiveness of the remaining debt, and the debtor cannot request personal bankruptcy again for the next 10 years. Representatives of the association Life in the Plus reported at the round table on the work of the association’s personal finance counseling service available to citizens with financial difficulties. Citizens’ interest is currently very modest, and the main reason is people’s shame in seeking help, it was heard at the meeting. They also reported that in 99 percent of cases, assistance in the counseling service is sought by women. (H)