Home / Finance / Honest entrepreneurs will have the right to one debt discharge

Honest entrepreneurs will have the right to one debt discharge

Under the radar, where there is only room for the delta variant of Covid-19 and inflation due to limited space, a recent news item has passed that changes are being prepared at the European Union level that will allow entrepreneurs to discharge their debts once in their working lifetime. Member states have so far regulated this differently, and even Croatia has offered citizens such an option twice in the past, but the directive from 2019 aims to standardize this practice at the Union level.

The directive on frameworks for preventive restructuring and providing a second chance, unlike regulations, requires member states to transpose the ‘spirit’ of the directive into their legislation within a certain timeframe, i.e., minimum legal thresholds applicable to all member states. Many will notice that failure in Croatia is not exactly limited, given the legal framework and judicial practice that allow many to open new companies without hindrance and abandon failed ventures to the wilderness of market reality. The directive should legally define and limit failure more clearly to enable those engaged in entrepreneurship because they genuinely want to create some added value for themselves and society to stumble once without it being the end of their entrepreneurial career or having to wait ages for a new beginning.

– In numerous member states, insolvent but honest entrepreneurs need more than three years to achieve debt discharge and start anew. Ineffective debt discharge frameworks and prohibitions result in entrepreneurs having to relocate to another jurisdiction to enable them a fresh start within a reasonable period, at significant additional cost for both creditors and the entrepreneurs themselves. Long-lasting prohibitions that often accompany the process leading to debt discharge create obstacles to the freedom of initiating entrepreneurial activity and self-employment – states the Directive.

Read more about regulating entrepreneurs’ rights to debt discharge in the digital and printed edition of Lider.

{embed_digitalno_izdanje}{/embed_digitalno_izdanje}