"Our aim is to reach a balance. To give over-indebted people a way out and at the same time to improve repayments, because debts have to be repaid," Miljenic said at a round table of debtors, consumers, bankers, public notaries and attorneys in Zagreb.
Miljenic said that consumer bankruptcy was designed as a final step which would help debtors to be relieved of their debts because creditors would partially write off liabilities. However, debtors would be left without any assets, even the real estate in which they reside if their debts are not settled within a bankruptcy period of five years.
Anyone who is not able to settle debts of more than HRK 30,000 for longer than three months are eligible for personal bankruptcy as are self-employed persons who do not have more than 20 creditors and whose debts are not more than HRK 100,000.
The ministry believes that most bankruptcies would be settled out of court through financial counselling by the Fina financial agency that would mediate between consumers and creditors.
If a settlement is not reached, the matter would be heard before a municipal court. In those cases where debtors own property, a trustee would be appointed to sell the property to settle creditors, however, consumers should be left with sufficient income for basic life's needs and the cost of accommodation.
Miljenic estimates that around 20,000 could seek counselling each year and between two and three thousand may end up bankrupt.
According to Miljenic, these procedures would cost the state around five million kuna per annum.
According to official figures, more than 320,000 Croatian citizens' accounts are blocked and that they owe more than HRK 31 billion.
(EUR 1 = HRK 7.7)