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November 19, 2019
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Czech debtors could see their collections procedures consolidated if bill passes

22.1.2019 12:51
Collections proceedings in the Czech Republic. (Collage:  Romea.cz)
Collections proceedings in the Czech Republic. (Collage: Romea.cz)

Debtors in the Czech Republic facing more than one collections procedure could see them consolidated under a single collections agent in the future, and proceedings during which no payments had been made for two years could also be suspended. Those are the changes proposed by an amendment to the Code of Enforcement designed by the Czech Justice Ministry.

According to Deputy Justice Minister Jeroným Tejc, a working commission of the Czech Government's Council on Legislation is currently reviewing the bill. "We want to focus on getting rid of the problem of multiple collections proceedings against the same debtor," said Tejc during a seminar on collections in the lower house, during which he presented the bill's principles.

"It is not, in our view, sustainable in the long run for several collections agents to be enforcing orders against the same debtor," Tejc said. Consolidating collections proceedings, in his view, would reduce the administration associated with them and lower their cost.

"Collections proceedings will continue just where it is possible to anticipate their fulfillment, not those proceedings that are persisting formally but are unable to ever achieve any results," Tejc said when explaining the plan to suspend collections proceedings if, after two years, no payment has been forthcoming and the debtor has no assets to seize. A creditor could, however, according to the draft legislation, restart a suspended proceedings by making a down payment to a collections agency to pursue the matter.

Employers who hire persons involved in collections proceedings would be paid CZK 50 [EUR 1.95] per month per such employee to cover the administrative costs associated with wage garnishing. That amount would be part of the costs of the collections proceeding and would therefore be paid by the debtor.

The Government's Council on Legislation should discuss the bill in mid-February. Should the council express agreement with the bill, the Government could receive it for debate by the end of March.

Some of those attending the seminar were critical of the plan to consolidate collections proceedings. Vladimír Plášil, president of the Chamber of Collections Agents, said that particular point of the bill was the most problematic.

The Chamber has long based its own position on introducing the principle of collections agents being affiliated with local jurisdictions, which a bill already submitted by the Pirate Party to the lower house is considering. Collections agent Petr Kučera agrees with the Pirate Party bill and said the ministry's plan plays into the hands of big collections agents and will lead to monopolization of the service.

Collections agent Lukáš Jícha, on the other hand, said he did not believe either bill would ever become eligible for adoption by Parliament. Jícha also said he does not believe it would be functional to designate local jurisdictions for collections agents.

ČTK, fk, translated by Gwendolyn Albert
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Exekuce, Politika, Práce, Reforma



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