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How to Discharge Debt and Personal Bankruptcy

Debt relief and personal bankruptcy is one of the ways to deal with distraint. A lot of people are clamping on it and hoping that the request will pass. But nothing is as easy as it seems…

The declaration of personal bankruptcy is possible in the Czech Republic according to the insolvency law since 2008, and in SEP since 2014 . Basically, personal bankruptcy or debt relief is that you have to repay at least 30% of your claims and benefit from a subsistence minimum for 5 years. If this happens, the remaining 70% will be discharged.



Debt relief methods

Debt relief

There are two general ways of debt relief :

  1. The debtor’s assets are seized and sold , and the money is used to settle the debt. The debt relief time will be significantly reduced.
  2. The debtor will receive considerable deductions from wages for the next 5 years. Only an unenforceable minimum , which reaches CZK 6,154.67 in 2017, may remain. For each dependent person (child or spouse), one quarter of the minimum will remain, which is CZK 1,538.67 this year.

There may be situations in which the debtor is insolvent (inability to repay debts), but the declaration of personal bankruptcy is not allowed because it does not qualify for authorization. In this case , the situation can be resolved by inviting a third party to assist the debtor in repayment.



Where to apply for debt relief?

Where to apply for debt relief?

Fully desperate debtors were tempted by the overpriced services of the allegedly debt-relief companies, who promised to help them for a considerable financial reward. It is good to know that most debt relief companies are fraud and the Ministry of Justice is going to take vigorous action against them .

The only one who can decide on debt relief is the county court at the place of residence to which the application form will have to be filed.

In addition, you will need to make a proposal in which the notary clearly writes how your bankruptcy has occurred and what your claims are.


Personal bankruptcy and marriage

Personal bankruptcy and marriage

Although one of the spouses has nothing to do with the debts after another, we clearly convinced in our series that the executor disregards such facts. Resp. they will also seize things that are part of the SJM. As for the debt relief request, it will generally be better if the bankruptcy is declared both. It is quite possible that the bailiff will throw himself at the other partner after the debtor’s judgment .

Moreover, since 2017, the new rules in the law apply. There was a ceiling on how much you would pay for processing an insolvency petition.

  • For one person max. 4000 CZK without VAT
  • For spouses max. CZK 6000 without VAT

Previously, the price was able to climb up to CZK 50,000. In addition, many debtors have unnecessarily suffered from notaries.


When will your personal bankruptcy request be refused?

personal bankruptcy

  • If you are unemployed.
  • If he considers that the debtor has no chance to pay for 5 years min. 30% of inquiries.
  • If the debtor’s intentions are dishonest.
  • If the debtor has no more than 2 creditors.
  • If it was a careless and irresponsible approach from the debtor’s party.
  • If min. once the debtor has declared personal bankruptcy.
  • If a debtor has committed a crime in the last five years.
  • In the case of self-employed persons, creditors with debt relief even have to agree.