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Government readies for introduction of personal bankruptcy

In Hungary

The Hungarian government launched preparations for the introduction of personal bankruptcy, a measure approved at the end of June under which insolvent Hungarians with debts – including interest and fees – between HUF 2 mln and HUF 60 mln, would be allowed to file for personal bankruptcy, exempting their assets from debt collection, Hungarian daily Napi Gazdasag reported on Friday. 

Under the preparation, the government is reportedly increasing headcount at government offices and is creating the necessary registries and forms. Experts of the Family Bankruptcy Protection Service will be accessible at government offices from September, while the process of managing the debt of families who file for bankruptcy will be overseen by the Justice Ministry, the paper said. Junior alliance governing party Christian Democrats KDNP proposed the bill. Debtors and lenders will now have an incentive under the rules to first reach an agreement on repayments among themselves, the bill states, adding that the agreement could involve a restructuring of debt, an exemption from late payments or a partial discharge of debt.

If debtors and lenders fail to reach an agreement, a court would act as an arbitrator. The bill also limits eligibility for personal bankruptcy to Hungarians whose debts do not exceed twice the value of their assets and the income they expect to use for repaying their lenders over a period of five years. It would also require at least 80% of the debts to be undisputed and limit the number of lenders to whom the borrower is indebted to five years.

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