Middle classes will soon be most at risk from debt collection, bailiff says

With ongoing lockdowns and the wide ranging economic impact of the coronavirus epidemic in the Czech Republic, there is concern that large segments of the population could fall into debt. This would leave them vulnerable to the cycle of enforced debt collection from creditors which often leads to property seizure. The President of the Chamber of Executors Jan Mlynarčík told Czech Radio that he believes the middle classes could be particularly at risk in the coming years.

Seizures of property, commonly known as “executions”, are a serious problem in the Czech Republic. In 2019, 790,000 people were reported to have been in the execution process due to the inability or unwillingness to pay their debts. Out of this number, more than 131,000 people were facing 10 or more execution proceedings at the same time.

The most dreaded stage of the execution process is the act of property seizure, when the bailiff comes to the home of the debtor and seizes his property as collateral for the debt.

Photo illustrative: Štěpánka Budková, Radio Prague International

Last year, most property seizures were put on hold by the government due to the coronavirus epidemic, but this moratorium officially ran out in February and organisations active in helping debtors say they fear a large increase in executions to happen sometime in mid-2021.

Some NGOs have warned that property seizures can have a particularly serious impact during the pandemic, when, for example, the seizure of the household’s computer leads to the inability of parents to provide distance learning for their children.

Normally, property seizures have been common among those at the bottom of society, but bailiff Jan Mlynarčík, who specialises in executions, told Czech Radio Plus that he expects the middle classes will be most at risk in the coming years.

“The middle classes are not yet used to seizures. This is why I think they are the most at risk. However, this will not become apparent within one or two years. It is more likely that we will see problems within a period of three to five years.”

Photo: Gilbert Mercier, Flickr, CC BY-NC-ND 2.0

He said that many people are not even aware that they are in the middle of a process of debt collection until the bailiff knocks on their door. To a significant degree this is because there is no law that would make it compulsory for them to register their current address and the letters informing the debtor that this process has been initiated never reach the individual.

“What is vital in this process is that the debtor has some sort of address at which he can collect this information, because this is a moment when they can choose to start paying within 30 days. This also leads to significantly lowering the expenses involved in the whole process of execution.

“If the first phase is not successful, for example in the sense that we are not able to access the debtors account and take away a percentage of their earnings to pay for the debt, we move on to other measures, such as property seizure.”