The development of the economic crisis, which has contributed to an increase in the unemployment rate and has greatly reduced the standard of living of citizens, was preceded by a period of credit expansion.
The consequence is the general indebtedness of citizens, which is why personal bankruptcy became a much-sought-after topic in 2015. We will deal with the basic details here, and when new information becomes available we will supplement the article.
The government introduced enforcement through FINA in 2012. Blocking citizens ‘accounts sought to secure creditors’ debt repayments.
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Considering that from 2012 to 2015 the number of blocked citizens’ accounts increased by an average of 3570 per month and the amount of debt by HRK 540 million, it is clear that the FINA executions did not produce the desired result.
The Consumer Bankruptcy Act will enter into force on July 1, 2015. By introducing this principle, the Government seeks to develop a system in which indebted citizens will reprogram their obligations and creditors settle claims.
The article deals with the subject in detail. If you’re just looking for the best line of credit and don’t have time to read, you can fill out a credit questionnaire right away.
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Consumer Bankruptcy Law
The aim of the Consumer Bankruptcy Act is to create the conditions in which an agreement on restructuring existing claims would be reached out of court. Therefore, the implementation of the Consumer Bankruptcy Law would relieve the judiciary of inefficient enforcement proceedings.
The law regulates: out-of-court proceedings before counseling centers, prerequisites for opening consumer bankruptcy proceedings, general rules on consumer bankruptcy, proceedings before the court, and conditions for releasing consumers from payment of their remaining obligations.
Who can apply for personal bankruptcy?
Personal bankruptcy is intended for indebted citizens who are unable to fulfill their due financial obligations for at least three consecutive months. The total amount of liabilities due should be at least HRK 30,000.00.
With the citizens of the so-called personal bankruptcy may also be claimed by natural persons pursuing an independent activity.
In which case are artisans entitled to personal bankruptcy?
Individuals pursuing an independent activity (eg craftsmen) may apply for personal bankruptcy, provided they satisfy the following criteria:
– they have no more than twenty creditors
– their financial obligations from performing independent activity do not exceed HRK 100,000.00
– have no financial obligations to workers (they do not owe salaries or contributions)
– no bankruptcy or bankruptcy proceedings have been instituted against them
When deciding on personal bankruptcy proceedings, the Government took into account the legislative trends of the EU Member States.
The European Union supports the out-of-court resolution of debt collection problems.
Stage One: Out-of-court proceedings
Out-of-court proceedings can only be initiated by the debtor. Therefore, citizens cannot be “driven” by creditors into personal bankruptcy.
At this initial stage, an effort is made to agree on how and in what amount the debtor will settle his debts.
For the duration of the out-of-court procedure, data on the claims of the creditor and the debtor’s assets are collected.
Out-of-court proceedings are carried out by intermediaries employed by the FINA’s counseling centers and organizational units. The procedure takes up to 60 days, and if the mediator or participants in the process of assessing the possibility of an agreement can be extended by an additional 30 days.
An out-of-court agreement concluded between a debtor and a creditor has the effect of an out-of-court settlement. Therefore, the agreement defines a plan for debt settlement, that is, stipulates the deadline and manner of fulfillment of obligations.
Stage Two: Litigation
If the debtor / consumer and the creditors fail to agree on a way to settle their existing debts, the proceeding is brought before the competent court.
The debtor again gets the opportunity to reach an agreement with the creditors, this time in the form of a court settlement. In case no court settlement is reached, bankruptcy proceedings are opened.
Stage Three: Opening Bankruptcy
Given that no agreement has been reached to settle the claim between the debtor and the creditor, the debtor and / or creditors file a motion to open bankruptcy proceedings.
So opening bankruptcy is the ultimate measure of bankruptcy procedure.
The court and the commissioner, selected by the court from the list of bankruptcy administrators, are the competent authorities in the consumer bankruptcy proceedings. The Commissioner takes on the role of mediator between the court, the consumer and the creditor in the further course of the proceedings.