Debts of over 150,000 citizens written off, PM says

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The debts of 150,474 citizens who each owed the state up to HRK 10,000 plus interests, totalling HRK 1.388 billion, have been written off since Saturday, when the law on writing off physical persons' debts went into force, Prime Minister Andrej Plenkovic said on Monday.

He recalled that in order to deal with the insolvency of citizens with blocked bank accounts, the government had proposed three bills which parliament enacted, on the write-off of physical persons' debts, on the seizure of cash assets, and amendments to the Bankruptcy Act. He added that a new distraint bill was being worked on.

Debts should be paid, Plenkovic told reporters. "However, we are a government aware of the difficult situation a part of our fellow citizens have found themselves in, we are socially sensitive and, with these three bills, we wished to resolve part of the problem of as many as 326,379 of our fellow citizens whose accounts were blocked as of 31 May 2018."

Their debt totalled HRK HRK 43.6 billion, plus about HRK 22 billion in interest, he said, adding that the aim of the law was to write off the debts of up to HRK 10,000, owed to the state or state-owned companies, by citizens whose bank accounts were blocked as of 31 December 2017.

Of the HRK 1.388 billion written off over the weekend, the principal amounted to a little over HRK 846 million and interest to nearly HRK 492 million.

Since the law envisages that physical persons' debts be written off also by local government and private creditors, Plenkovic appealed on them to follow the government's lead. "In order to motivate them, the law envisages profit and income tax breaks so that those creditors... can show social responsibility towards citizens whose accounts have been blocked a long time."

He recalled that the same law also envisaged a tax debt rescheduling model.

The law on the seizure of cash assets, going into force at the beginning of August, is aimed at discouraging bank account blockades for more than three years. Plenkovic said the government expected this law to reduce the number of citizens with blocked accounts by 70,000 and the amount of the assets blocked by HRK 30 billion.

The Bankruptcy Act will go into force at the beginning of 2019. It is expected to simplify the bankruptcy procedure for over 80,000 people who owe up to HRK 20,000 each.

Plenkovic said all these measures were aimed at reducing by 150,000 the number of citizens with blocked accounts and by HRK 33 billion the debt they owed in total.

As for the new distraint bill, he said the aim was to make provisions "swifter, simpler and much cheaper" as well as "to protect the dignity and livelihood of debtors."

He voiced confidence that all these legal solutions would have clear effects on over 320,000 citizens with blocked bank accounts.

Text: Hina