Under the bill, 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. Debtors and lenders would 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 would also limit 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.

Bence Rétvári of KDNP said earlier that the assistance would only be available to those who apply. Hungarians who file for personal bankruptcy would be prohibited from filing again for a period of ten years from the close of the previous procedure, MTI added.

The personal bankruptcy rules would come into force from September 1, 2015 for Hungarians whose homes could be repossessed. The rules would become universal from October 1, 2016.