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Banks commit to personal bankruptcy law, with fine-tuning

The Hungarian Banking Association and all its member banks are fully committed to the recently introduced legal institution of personal bankruptcy, but see it necessary to fine-tune the rules, secretary general Levente Kovács said on Friday, according to Hungarian news agency MTI.

Kovácsʼs statement came after Bence Rétvári, vice president of the Christian Democratic Peopleʼs Party (KDNP), a coalition partner of the Fidesz government, said in Fridayʼs edition of the daily Magyar Idők that banks are failing to help borrowers and do not provide clients sufficient information on bankruptcy protection, putting a brake on the systemʼs use. 

Kovács recalled that the government, the National Bank of Hungary (MNB) and the banking sector had jointly worked out several programs to help mortgage borrowers struggling with debt servicing problems. Recently, the association, closely cooperating with the justice and economy ministries, prepared and introduced legislation on personal bankruptcy at record speed.

Kovács noted that the association warned several times that there would be a need to refine the regulations further in order to cut back clientsʼ administrative burdens and to operate the system efficiently because of the very short time for preparation. Such a procedure is common practice internationally, he added.

Personal bankruptcy rules came into force in Hungary from September 1, 2015, for Hungarians whose homes could be repossessed. The rules will become universal from October 1, 2016.