Every tenth household in Poland has experienced debt recovery procedures, whereas 2% have had their salaries seized by a bailiff, show surveys commissioned by UOKiK. Some of the debtors will soon be able to file for bankruptcy

The aim of the survey carried out by TNS OBOP was to analyze the indebtedness of Polish households. It turned out that half of the Polish people (51%) solve their financial problems by borrowing money, whereas every third household is in debt. Most frequently we indebt ourselves in banks - that is where 79% of households have taken a loan from. As a rule, these are not big sums - approximately 1/5 of the households have debts of less than PLN 1 thousand, another 28% - of up to PLN 2.5 thousand, 20% owe up to PLN 100 thousand and 3% - over PLN 100 thousand. Consumers defaulting on their loans can face a bailiff’s intervention - this was the case of 2% of the households. Some of the persons who are unable to pay off their financial liabilities will soon be allowed to file for bankruptcy and as a result, after some of their debt has been paid, it will be possible for the remainder to be written off. This possibility is envisaged in the draft amendment to the Act on bankruptcy and rehabilitation law and the Act on court costs in civil cases.

The Office of Competition and Consumer Protection has for many years been postulating the introduction of consumer bankruptcy into the Polish legal system, indicating at the same time that this possibility should not apply to each debtor. A chance to “start anew” should be granted only to those who have indebted themselves in a rational manner but cannot meet their liabilities due to force majeure.

The draft amendment is compliant with UOKiK’s stance. The legislative changes will allow consumers to take advantage of the debt write-off procedure, at the same time securing creditors’ rights. In the lawmakers’ intention, consumer bankruptcy is to constitute an exception not a rule and one will be entitled to file for it only in special cases. The right to declare bankruptcy will be granted to natural persons who do not run business activity and who have become insolvent due to exceptional circumstances that are beyond their control, e.g. due to a chronic illness, unfortunate accident or non-culpable loss of job. Bankruptcy will be declared by a court of law and it will consist in winding-up of the debtor’s assets to monetize them and transfer to the creditors. A consumer will be allowed to file for bankruptcy once in 10 years. If it proves necessary to sell the debtor’s real estate to pay the liabilities, the court will allot part of the funds obtained for the consumer to rent a flat for one year.

The Act also ensures that creditors’ rights are protected. In the event that the funds obtained after selling the debtor’s assets are not sufficient to pay off all the liabilities, the court will, upon the debtor’s request, determine a schedule of their repayment within five years. The scope of the repayment will depend on, among other factors, the indebted person’s income, the ability to repay the dues and their value. Moreover, in consideration of the creditors’ rights, the draft assumes that during the repayment period the debtor will not be allowed to draw any new loans, credits or make instalment purchases. The consumer will also have to submit an annual report on the fulfilment of the repayment plan, on the income achieved and the assets acquired in the preceding year. Moreover, the proposed regulations stipulate that it will not be possible to reduce the liabilities determined by the court - it will only be possible to modify the repayment plan in the event of temporary difficulties making the debtor unable to continue repaying the liabilities. In such a case, the court will have the power to prolong the repayment period, however, by two years maximally. It will be in turn possible to increase the scope of repayment if the consumer’s financial situation improves, but only when the improvement does not result from an increase in his/her salary or income from his/her gainful activity. Importantly, the fee for submitting an application is determined in the draft at a low level.

The problem of consumer bankruptcy and household indebtedness was addressed during a debate held by the Office of Competition and Consumer Protection. The meeting hosted representatives of the Polish government administration, academic circles, consumer organisations and the business sector. The draft regulation is in line with the tendencies present in the legislation of the other European Union countries and implements, in a manner adapted to the Polish realities, the rule of the so-called “fair fresh start”. We believe that this instrument will allow consumers who have over-indebted themselves due to force majeure to regain liquidity while securing creditors’ rights, said Małgorzata Krasnodębska-Tomkiel, President of UOKiK during the debate.

The possibility for natural persons to file for bankruptcy is in use in many countries of the European Union (including Germany, France, Finland, Belgium, Ireland, Spain, Luxemburg and the Netherlands). Due to lack of uniform EC regulations on the issue, the solutions adopted in individual countries vary from each other. What they have in common is the fact that the proceedings take place before a court.

Additional information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw, Poland
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail: [SCODE]bWNpZWxvY2hAdW9raWsuZ292LnBs[ECODE]