Czech Human Rights Minister: Debt relief is a basic aspect of addressing social exclusion

Combating social exclusion involves not just creating accessible social housing and schools that don't discriminate, but debt relief. Czech Human Rights Minister Jiří Dienstbier opened up this very sensitive topic during the "Partie" discussion program on the Prima television station yesterday.

"I'd mention one more thing, which is naturally politically very sensitive because it must be undertaken in such a way as to avoid creating a moral hazard, but we must discuss a more accessible model for debt relief, because currently according to the bankruptcy law, only those who are capable of paying off 30 % of their unsecured obligations within five years are permitted to go into personal bankruptcy. We have an enormous number of people now who at this moment are incapable of paying down their debt and we are pushing them absolutely outside the system," Dienstbier said.

"On the one hand, they cannot negotiate normal leases for apartments, and therefore they are frequently pushed into those expensive, lower-quality forms of housing. We are incapable of getting them into the legal labor market, because it is more rational economically for them to work under the table, and that means, among other things, that we are also losing their contributions to health insurance, social security, and taxes, and that is absolutely a basic problem we must focus on, because all those who are attempting to address the question of social exclusion are drawing attention to the fact that over -indebtedness is basically an insoluble problem, at this moment, that is preventing these people from re-entering normal life," the minister said.

His opponent in the discussion, Civic Democratic Vice-Chair Martin Kupka (ODS), warned of the risks of debt relief:  "If we're going to talk about debt relief, the state must not be allowed to send the signal that it is possible not to pay one's debts. The institution of personal bankruptcy does exist, and it does make sense to discuss how it actually could function better, but to send the signal that it is possible not to pay off your debts would really be overwhelming for this society."

"I said we must do this in such a way as to avoid moral hazard," Dienstbier reiterated. "When we are talking about personal bankruptcy, which should be more accessible for those who are already today basically completely excluded from economic and social life because of the situation they are in, then naturally it would have to be tied to their fulfilling very strict conditions for several years, including sincere attempts to pay off what they can, and conditions for their creditors in some sort of controlled regime."