On January 1, 2022, a new law on the exemption of individuals from debt obligations came into force, which makes it possible for persons in financial difficulties to get rid of debt obligations arising from a consumer loan agreement if the amount of debt exceeds one minimum wage established in the country but does not surpass 5,000 euros.
If an individual is unable to pay the debt and meets all the criteria established by law, then such a person is entitled to submit an application to a notary for release from debt obligations.
After submitting and accepting the application,
the debtor is obliged within six months to master free financial literacy courses conducted by the State Employment Agency.
If the creditor objects to the debtor’s application for release from debt obligations, then the creditor is entitled to file a claim with the court within the time period set by the notary. For the period while the trial lasts, the notary postpones the consideration of the application.
If, at the end of the six-month period from the date of acceptance of the application, the notary states that the debtor has completed financial literacy courses and the creditor has not filed a lawsuit against the debtor, and there are no other obstacles to release the debtor from debt obligations, the notary shall draw up a notarial deed on the release of the debtor from debt obligations.
Information that a physical person has been released from debt obligations shall be reported by the notary to the insolvency register, which makes a corresponding entry in the insolvency register.
After an entry is made in the insolvency register about the release of the debtor from debt obligations, the debtor is prohibited from entering into new consumer loan agreements for the next 2 years.
Within 3 months after the notary has drawn up an act on the release of the debtor from debt obligations, the debtor is obliged to provide the notary with one of the following documents:
- a certificate of the existence of an employment relationship or an equivalent relationship,
- confirmation of registration as a merchant or as a person carrying out economic activities,
- a document that objectively substantiates the incapacity for work during all three months from the date when an entry was made in the insolvency register about the release of the debtor from debt obligations,
- the decision of the State Employment Agency to assign the status of the unemployed.
The above requirements do not apply to a person receiving an old-age pension or who has reached retirement age.
Within 2 years from the day when an entry was made in the insolvency register about the release of the debtor from debt obligations, the creditor or other person whose legitimate interests are affected, as well as the notary, have the right to apply to the court to cancel the exemption of an individual from debt obligations.
The grounds for canceling the exemption of an individual from debt obligations are:
- the debtor does not fulfill his obligations to provide the notary with the necessary documents or violates the established restrictions on obtaining new loans;
- when submitting an application to a notary, the debtor provided false information, due to which he/she was unreasonably released from debt obligations.
One can use the opportunity to get released of debt obligations only once.
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