Czechs increasingly running up problem debts with even bailiffs calling for action
An increasing number of Czechs are facing problems with debts, the daily Hospodářské noviny reported on Wednesday. According to the daily, every tenth Czech has had some serious problem repaying debts and either they or their relatives are facing property seizure.
According to the daily, the number of indebted Czech individuals has increased significantly over the last decade. Data from the Czech National Bank suggests that the overall debt burden amounted to 395 billion crowns in 2005, while in 2014 that figure stood at 1.1 trillion.
While in 2013, there were approximately an average of three property seizures per debtor, last year it was already mounted to an average of six. At the moment, some 380,000 people are facing more than four property seizures at the same time.
The ministry of justice, headed by Robert Pelikán, is currently working on a legislative change that would force loan firms to carefully consider who they are lending money to.
The pressure to change the current practice has come not only from organizations helping people in debt but also from the bailiffs themselves. According to the Czech Republic’s Chamber of Bailiffs, Pavla Fučíková, a number of bailiffs are currently facing financial problems, because they are unable to enforce their claims. At the moment, Czech debtors are facing around 4.4 million property seizures.
Mr Pelikán told the daily Hospodářské noviny that the ministry wanted to economically motivate creditors to carefully consider who they are lending the money to and to consider whether they are ready to enforce their claims later.
Under the ministry’s plan, expenses connected with irrecoverable property seizures should be covered by the loans companies themselves. According to the minister, the move will force the loans companies to better check their clients credit risk before loans are offered.
Some experts, such as Daniel Hůle of the People in Need organisation, says some of the loans companies’ business model is actually based on the fact that the debtors won’t be able to pay back, pushing them into property seizures.
According to lawyers specialised in enforcing claims, the behaviour of debtors has also changed over the years. Robert Němec of the Czech Bar Association told Hospodářské noviny that an increasing number of people keep taking new loans despite knowing they won’t be able to pay them back.