Amendment to the Insolvency Act

On the 1^st June 2019 and amendment to Act No. 182/2006 Coll on bankruptcy and methods of its solution (hereinafter referred to as “Insolvency act”) came into force, which mainly concerns the change in the conditions of debt relief of natural persons.

According to §412a Insolvency act, debt relief ins now fulfilled if:

a)the debtor has fully repaid their unsecured creditors

b)the debtor has paid to unsecured creditors at least 60% of their claims within 3 years of the discharge of the debt relief

c)the discharge of the debt relief has not been cancelled and the debtor has not breached his obligations to make all reasonable efforts to satisfy his creditor’s claims for a period of 5 years from the discharge of the debt relief; it shall  be deemed not to have breached this obligation, if the creditor has paid at least 30% of his debts to unsecured creditors.

Compared to the previous regulation, the conditions for exempting debtors from the debt trap have been mitigated, because according to §412a let. c), in justified cases, the debtor is no longer obliged to repay the minimum limit of 30% of his debts to the creditors. However, it will be the insolvency court’s decision, whether the debtor has made every effort to repay his claims.