Increased cost of living, reduced purchasing power and a prolonged economic crisis have led large numbers of citizens to severe financial debt and insolvency.
According to Good Finance data, 11.14% of working-age citizens of Croatia are blocked (12.65% in Osijek-Baranja County, 11.74% in Vukovar-Srijem County).
Perhaps the just-signed Agreement to Mitigate Citizens’ Financial Difficulties, as it is called these days, may be a fresh start for about 20% of blocked citizens.
To whom will the debts be forgiven?
Debt forgiveness is foreseen for the socially most vulnerable and vulnerable part of citizens who are in the process of forced collection of claims and have been blocked for more than 360 days. The total amount of foreclosure due from them as on 30.09.2014. year must not exceed USD 35,000.00.
Citizens who are beneficiaries of a guaranteed minimum social benefit, support benefits or recipients of a personal disability allowance belong to the first group of debtors (criterion A).
In addition, debt forgiveness will also be available to citizens belonging to another group (criterion B) for debt forgiveness, whose monthly income does not exceed USD 2,500.00 for a single person or USD 1,250.00 per household member. The average of quarterly earnings is taken up to the date on which a debt relief application is filed.
The average includes earnings on the basis of work, pensions and the like. It does not include income such as child allowance, disability allowances, scholarships, cash benefits to support a newborn child, one-off assistance from local and regional government units and more.
Citizens must not own any real estate other than the one in which they live, any additional property they could possibly sell, or any form of savings.
Who will forgive debts in Slavonia?
The debt forgiveness agreement has been signed by tele-operators, banks, debt collection agencies, state-owned enterprises, the tax administration and several cities.
If, by the criteria, citizens belong to a group of debtors who can apply for debt relief, it is important to know which cities, tele-operators and financial institutions are ready to write off debts up to USD 10,000.00:
In addition to the above, the companies, legal entities and public institutions founded by the Republic of Croatia will also forgive debts up to USD 25,000.00.
If citizens owe one of the tele-operators and wish to apply for cancellation or deferral of debt, the total recorded debt may not exceed USD 10,000.00 cumulated against all creditors.
Tele-operators will forgive the first group of debtors. However, in the case of debtors of the second group, tele-operators will defer payment of their debts for one year. Debtors who pay off their debt within a year will be charged interest on arrears that would accrue during the time when the enforcement is postponed.
Claims collection agencies
In recent times, it has often been the case that a bank, tele-operator or other company sells its heavily collectible receivables to a collection agency. Agencies at lower cost buy back citizens’ debts and try to collect them at full price.
The vast majority of citizens are unaware of the fact that the companies they owe have the right to sell their claims to another agency. Some of the citizens only realized with the submission of a debt forgiveness claim that they were not owed to a tele-operator or a bank, but in fact to a debt collection agency. About 6,900 citizens owe $ 23m to these agencies.
As of mid-February, the 4 largest debt collection agencies have become creditors who write off debts whose principal amount does not exceed USD 10,000.00.
Procedure for accessing debt relief
The first group of debtors may file a write-off request as of 2 April 2015. The second group of debtors submits applications from 03 April 2015 to 30 June 2015 at the latest.
Both groups must check whether they have access to write-offs or debt deferrals. They can do this check at the outlets or the Good Finance website. If the debtor has the ability to write off or defer debt, he will collect the necessary documentation: