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Even richer people can´t cope with debts, they are desperately asking for personal bankruptcy

0 Comments 16 July 2013

The standard of living of many people decreased rapidly and experts call attention that even richer people get in big problems. Also, they declare personal bankruptcy more and more frequently. The worst situation is in the Moravian – Silesian Region, which participates in a quarter of the total number of insolvencies in the country.

His debts amounted to 620,000 crowns. He owes six creditors and can see the only solution. Personal bankruptcy. Meet the average client of the Ostrava Counselling in Financial Stringency.

Indebtedness in the Moravian – Silesian Region becomes bigger and bigger problem, not only destitute people go for professionals because of insolvency. For example, according to the register Solus, to which other banks are looking in providing loans, in the region there is not able to repay their debts each one out of ten of the population.  Debts are a serious problem even for wealthier people.

“Recently, we are frequently visited by people who own the apartment, house or other immovable property. It is approximately two out of ten clients. That’s a big difference comparing to earlier years, when just destitute people were coming, ” says Martin Gojný from Ostrava Counseling.  He adds that the vast majority of people have already come up with the fact they need to help with a personal bankruptcy.

There are significant differences in each district

Only in the last three years 1,500 people have declared personal bankruptcy with assistance of the Counseling. ” Payment of debt is going on at ninety percent of clients. Process at seven percent of clients is completed and about one out of ten of these clients sold their property and the remainder of the debt was forgiven, others payed off the whole debt. Bankrupt was declared for the last three percent, the half of these cases had an accidental character, the second half was caused by unemployment, theft and other debts, “says Gojný.

The statistics of the Czech CreditBureau, which  deals with this issue, show  that the Moravian – Silesian Region participates in a quarter of the total number of insolvencies in the Czech Republic. But it is not equally bad everywhere. “There are significant differences in the Moravian – Silesian Region within its districts,” says Miroslav Beneš (Solus Association).

There are clients with forty loans

The worst situation is around Bruntál city, 13.6 out of a hundred adult residents in the district are unable to pay their liabilities. The bad situation is also in Karviná (12.8 person out of a hundred) and Ostrava (11.8 person out of a hundred).

In Nový Jičín district there is a similar situation, just 8 percent of adults in Opava and in Frýdek-Místek it is 6.8 percent. The average in the Czech Republic is 8.2 percent. According to the annual comparison, people in the region fall into debts more and more. Numbers of insolvency proposals increase in all categories including companies and entrepreneurs.

“We have also extreme cases, for example, clients with forty loans, all at once, ” says Martin Gojný from Ostrava Counseling. According to him, the fact that even  wealthier people have this kind of problems is a consequence of an overall situation in society and an economic crisis as well as of a decline of real estate prices, economic fluctuations and unemployment.

“People took mortgage. Then they lost their jobs and they are unable to repay now. The property has now much lower price than three years ago. Even if they sold it, they wouln´t repay it all. And hence banks reluctantly agrees to sell the property under the price of the mortgage, “explains Gojný.

Seniors became a vulnerable group also

“Execution of pensions and health insurance benefits increase every year,” says the spokesman of the Czech Social Security Administration Jana Buráňová.

According to the regions, the Administration doesn´t  observe  the situation. However, in a whole country there were 67,614 pensions in execution last year. The year before it was 60,874. In the year 2000 it was 15,000 pensions.

Debts often drive people out into streets. Return to a normal life is complicated. “The majority of our clients are debtors. Lots of people got to havens because of thein over-indebtedness. They have no chance to get a different place to stay. If they don´t repay their rents and energy bills, no other companies in this field conclude a contract with them, “explains the director of Ostrava Charity Martin Pražák.

He adds that for example, the Vienna city financially helps debtors to the certain extent. It is cheaper than if they fell into the social trap.

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