As of June 1, an amendment to the Insolvency Act with milder conditions for debt relief became effective. The aim of the amendment was to allow more people to get rid of their debts. So far, the amendment really fulfills its purpose, because significantly more debtors are entering debt relief.
In June, more than 3,500 insolvency proceedings were opened in the Czech Republic. This is approximately double that of the current month in 2019. The current increase in ins. management is also due to the fact that people who have been waiting for the amendment are entering debt relief. Thus, those who wanted to enter the debt relief before, but did not meet the legal conditions, or waited for the amendment to enter into debt relief under more favorable conditions. From our point of view, it is not excluded, it can even be expected that in the coming months the number of ins. proposals.
Over 1,000 people contacted the Debt Advisory Center in June.
Some of these people have decided to solve their debt situation through debt relief. The number of people who turned to us in June for help with debt relief increased compared to the current month. At the same time, we received more debt relief questions in June. Many questions were from our current clients who were waiting for the amendment. In recent years, over 30,000 people have approached us, and some of them wanted to solve their situation through debt relief, but did not meet the legal requirements, but thanks to the amendment they can now solve their debt situation. As regards debt relief, more than 10,000 people have approached the Debt Counseling Center over the past year, of which more than 2,000 have eventually gone into debt relief. This means that more than 10% of all people who entered into debt relief in the Czech Republic last year turned to Debt Advisory Center at the very beginning.
In fact, significantly more people could enter debt relief in the Czech Republic.
There are hundreds of thousands of people in the Czech Republic who could enter into debt relief because they meet the legal requirements. The execution in the Czech Republic currently has more than 800,000 people, of which more than half have 3 or more executions. Many other people have no distraint, but they qualify for debt relief. They are bankrupt and unable to pay their debts. In reality, however, not everyone, and even most, will enter debt relief. Some of these people do not meet the legal requirements and another does not enter for other reasons. We will discuss why most people do not enter debt relief, even if they could, in one of the other articles.