Personal bankruptcy law failure, says LMP

Budapest, August 15 (MTI) – Green opposition LMP has branded Hungary’s personal bankruptcy law a failure and proposed that the legislation should be changed to make debt repayment fairer and allow lower-income debtors to file for personal bankruptcy as well.

Lawmaker Erzsébet Schmuck said on Monday that only 450 people have filed for personal bankruptcy since the law entered into force last September. However, tens of thousands of people would have been eligible, she told a press conference.

Schmuck said a personal bankruptcy law was needed because some 100,000 Hungarians are in danger of losing their homes. Citing press reports, she said that more than 1,500 homes have been repossessed since March this year compared with a total of 600 repossessions in 2015 and 550 in 2013.

Schmuck said the government at first blamed the media for “the failure of the personal bankruptcy procedure” and is now “pointing the finger at banks”. But she said LMP believes that the current law requires substantive changes, otherwise the procedure will remain ineffective.

LMP is proposing that the monthly income debtors are allowed to spend should be raised because under the current rules, debtors in the programme are forced to live below subsistence level during the five-year repayment period. The procedure should also be made accessible to people with lower incomes and administrative procedures in connection with filing for personal bankruptcy should be simplified, Schmuck said.

Personal bankruptcy rules came into force from September 1, 2015 for Hungarians whose homes could be repossessed. The rules will become universal from October 1, 2016. The law passed last summer allows insolvent Hungarians with debts, including interest and fees, between 2 million forints and 60 million forints, to file for personal bankruptcy, exempting their assets from debt collection.

Source: MTI