As of the end of September, the Czech Republic has seen a modest improvement in its citizens’ ability to repay debts, with 4.53 percent of adults having overdue debts. This marks a decrease from 4.94 percent a year earlier and 5.15 percent at the close of 2021, showcasing a positive trend even amidst the challenges posed by high inflation, which has increased living costs for many individuals.

Notably, the region with the highest proportion of adults grappling with overdue debts is Ústecký Kraj, where 9.32 percent of adults find themselves in debt, followed closely by Karlovarský with 7.94 percent. In contrast, Zlínský Kraj and Vysočina boast the lowest percentages, standing at 2.79 and 2.80 percent, respectively.

The third quarter of this year witnessed a decrease in the total number of people with overdue debts, dropping by two thousand to 406 thousand individuals. Despite this decline, the overall amount owed remained stable at 30.7 billion crowns.

Jan Stopka, the secretary of the Solus association, highlighted the positive trajectory by noting that 15 years ago, the register contained over a million citizens with overdue debts. The decreasing number of individuals facing such financial challenges is attributed to responsible lending practices, leading to debt collection discontinuation on the creditor’s side or successful debt repayment on the client’s side.

However, despite the overall decrease in debtors, there is a concerning trend of new records in the register among consumers who had not previously struggled with their financial obligations. In 2023, companies registered new overdue debts for 79,000 people, with 42,000 of them facing debt repayment problems for the first time this year. Over half of those registered this year had a track record of regularly repaying their debts in the last twelve months, indicating a potential impact of the increased living costs and the depletion of financial reserves among these consumers. This nuanced situation underscores the complexity of the economic landscape and the ongoing need for financial resilience strategies.

Article by Prague Forum