The recent news from the Czech Republic indicates that a significant number of foreclosures were stopped during the second round of the grace period, which allowed debtors to eliminate their debts with public institutions without paying interest, penalties, or court costs. The action lasted from September to November, and bailiffs managed to recover around CZK 120 million from debtors during this time. The amount of debt forgiven increased from CZK 37,000 to CZK 43,000, with a total of CZK 370 million forgiven.

The Chamber of Executors reported that more than 946,000 executions could theoretically have been stopped during the second round of the grace period. The larger attachments usually have larger foreclosures with larger principal amounts, and these were the primary reason for the increased amount forgiven during this round. In the first grace period, 52,000 foreclosures were stopped, with CZK 1.55 billion worth of accessories forgiven.

The Chamber of Executors also reported that there were 4.1 million foreclosures pending in the Czech Republic at the end of January, affecting 672,400 debtors. Shockingly, about 166,000 people had ten or more execution proceedings simultaneously. These numbers indicate the urgent need for debt relief measures to help those who are struggling with debt and prevent more foreclosures in the future.

In response to this situation, the Ministry of Labour and Social Affairs has announced that it would like to see another round of the grace period, which would apply to individuals, including sole traders and companies. This would provide relief for those struggling with debt, particularly in light of the ongoing economic difficulties caused by the COVID-19 pandemic.

It is crucial to note that debt relief measures are not a permanent solution to the problem of debt. It is essential to address the root causes of debt and provide education and resources to help individuals and families manage their finances effectively. This includes providing financial literacy education and increasing access to credit counseling services.

In conclusion, the recent news from the Czech Republic highlights the urgent need for debt relief measures to help those who are struggling with debt and prevent more foreclosures in the future. While debt relief measures can provide temporary relief, it is essential to address the root causes of debt and provide education and resources to help individuals and families manage their finances effectively.

Article by Prague Forum