Increasing number of Czechs face financial problems following Covid-19 crisis

Photo: Gerd Altmann, Pixabay / CC0

As the government’s temporary measures adopted to limit the negative impacts of the coronavirus crisis draw to a close, an increasing number of Czechs are starting to face serious financial difficulties. Indeed, debt advisory centres around the country are reporting a surge in the number of clients seeking their advice.

Photo: Gerd Altmann,  Pixabay / CC0

Following the coronavirus lockdown, the Czech government in April approved a set of protective measures to help individuals as well as businesses cope with the sudden loss of income.

The measures included the deferral of loan payments, such as mortgages, for the duration of three or six months and prevented the termination of leases on grounds of unpaid rent for the period until the end of June. The state also temporarily halted the seizure of debtors’ property.

With some such measures already having come to a close, debt advisory centres are reporting a surge in the number of clients. David Šmejkal is the head of the debt advice centre Poradna při finančí tísni.

David Šmejkal,  photo: CEVRO

“In recent weeks, we have seen an increase in clients who already had problems prior to the coronavirus crisis but, thanks to the government measures, didn’t have to deal with them until now.

“The debtors have found themselves in this sort of protective pillow, didn’t have to worry about the enforcement of debts or distraint orders. But as these measures gradually draw to a close, the pressure on debtors whose instalments have been delayed is increasing.”

While in the first month of the coronavirus crisis people were mostly inquiring about nursing care leave and social benefits, now they are mainly asking for advice concerning debts, distraint orders or loss of employment.

Daniel Hůle is the head of People in Need’s debt advisory centre:

“We have been registering an increase in the number of clients who have lost their jobs. Our clients are often people with limited education, whose position on the job market is more difficult. They usually don’t have long-term employment contracts. We have also seen an increase of clients who are dealing with property seizures.”

Photo: Pexels,  Pixabay / CC0

Despite the rise in the number of clients, experts say the biggest wave is likely to hit in the autumn. David Šmejkal again:

“During the summer months the number of clients is traditionally lower. However, with some government measures ending, we have already registered an uptick in clients.

“The six-month deferral of loan payments finishes at the end of October. At the same time, we will start to feel the impacts of the economic cool down, so we are expecting to see a surge in clients dealing with debts.”

According to the Czech Chamber of Executors, the number of property seizures carried out in May was the lowest since 2013. However, experts say it may be just a question of time before the figure starts to grown again.