The amendment to the Insolvency Act implements easier debt relief for individuals

Act No. 31/2019 Coll.
Effective from: 1 June 2019

This amendment reflects the debt situation in the Czech Republic, where a significant number of debtors are in a so-called debt trap. The existing regulation requests that a debtor pays off at least 30 % of his debts within 5 years to be completely relieved of debts.  

The aim of the amendment is to increase motivation of individuals for the return to a proper and lawful economic life. The conditions for debt relief will be softer, the threshold will be an income equal at least to the unseizable minimum and the monthly remuneration of the insolvency administrator and the creditor. The debt relief will be confirmed by the court, even in the case of its conviction that the debtor has taken his best effort to pay off his debts.  

The amendment will introduce debt relief in three variations:

• the debtor has paid off the claims of unsecured creditors in full; or
• the debtor has paid off at least 60 % of the claims of unsecured creditors within 3 years; or
• the debtor has paid off at least 30 % of the claims of unsecured creditors within 5 years, or the debtor has taken his best effort to satisfy his creditors.

Therefore, the courts’ ruling and the individual circumstances assessment in individual cases will be decisive after this amendment.