“Debts of Over 150,000 Citizens Written Off”

By 23 July 2018

ZAGREB, July 23, 2018 - The debts of 150,474 citizens who each owed the state up to 10,000 kuna plus interests, totalling 1.388 billion kuna, have been written off since Saturday, when the law on writing off physical persons' debts went into force, Prime Minister Andrej Plenković said on Monday.

He recalled that, in order to deal with the insolvency of citizens with blocked bank accounts, the government had proposed three bills which parliament enacted, on the write-off of physical persons' debts, on the seizure of cash assets, and amendments to the Bankruptcy Act. He added that a new distraint bill was being worked on.

Debts should be paid, Plenković told reporters. "However, we are a government aware of the difficult situation a part of our fellow citizens have found themselves in, we are socially sensitive and, with these three bills, we wished to resolve part of the problem of as many as 326,379 of our fellow citizens whose accounts were blocked as of 31 May 2018."

Their debt totalled 43.6 billion kuna, plus about 22 billion kuna in interest, he said, adding that the aim of the law was to write off the debts of up to 10,000 kuna owed to the state or state-owned companies by citizens whose bank accounts were blocked as of 31 December 2017.

Of the 1.388 billion kuna written off over the weekend, the principal amounted to a little over 846 million kuna and interest to nearly 492 million kuna.

Since the law envisages that physical persons' debts be written off also by local government and private creditors, Plenković appealed on them to follow the government's lead. "In order to motivate them, the law envisages profit and income tax breaks so that those creditors can show social responsibility towards citizens whose accounts have been blocked a long time." He recalled that the same law also envisaged a tax debt rescheduling model.

The law on the seizure of cash assets, going into force at the beginning of August, is aimed at discouraging bank account blockades for more than three years. Plenković said the government expected this law to reduce the number of citizens with blocked accounts by 70,000 and the amount of the assets blocked by 30 billion kuna.

The Bankruptcy Act will go into force at the beginning of 2019. It is expected to simplify the bankruptcy procedure for over 80,000 people who owe up to 20,000 kuna each.

Plenković said all these measures were aimed at reducing by 150,000 the number of citizens with blocked accounts and by 33 billion kuna the debt they owed in total.

As for the new distraint bill, he said the aim was to make provisions "swifter, simpler and much cheaper" as well as "to protect the dignity and livelihood of debtors."

He voiced confidence that all these legal solutions would have clear effects on over 320,000 citizens with blocked bank accounts.