Debt forgiveness for socially disadvantaged citizens

It is in the government’s interest to reach an agreement with the principal creditors

The state cannot write off citizens’ debts to creditors (eg banks, tele-operators, utilities, etc.), creditors can do it themselves.

Considering that in the last few years the debt of the citizens towards the mentioned creditors has doubled and came closer to the amount of HRK 30 billion, it is necessary to adopt a legal solution to help the citizens.

What does the agreement bring to creditors?


The biggest problem is the fact that the stated debts of citizens in the financial books of creditors (listed companies and banks) are recorded as their income.

The Government, by virtue of the Income Tax Regulations, makes available to the executors a reduced base for taxation by the amount of debt written off.


In order to qualify for a debt relief as a tax deduction, the bank must prove that it has taken absolutely all legal steps to collect the debt.

By simplifying state tax regulations, banks would reduce legal costs.

In addition to tax breaks, the main incentive for the debtor to meet debtors is the fact that this is a category of socially most vulnerable citizens (eg, they have lost their jobs, have no roof, are ill, etc.), of which the executors will not be able to be paid anyway.

Penalty for bailiffs who oppose the agreement


Finance Minister Boris Lalovac has therefore decided to reward creditors who agree to write off debts to the socially most vulnerable tax deductible expense.

Creditors who do not agree to debt forgiveness have been threatened with a legal moratorium on foreclosure.

For example, during the moratorium no further activities (collection, foreclosure, interest on arrears, sale of real estate, evictions, etc.) could be carried out against these citizens.

Given that the negotiations have been going on for a year now, the question is why did the Government not introduce a legal moratorium on foreclosure until the end of the negotiations? Namely, all year round, citizens are charged default interest, charged court costs, enforced foreclosures, etc.

Skeptical creditors


Putting the social component aside, the key question is how the Government will motivate private companies to forgive millions of kunas. Namely, it is about profiteers, not volunteer companies.

An overview of the share of citizens’ debts to leading creditors in June 2014, when the total debt of citizens amounted to almost HRK 28 billion:

Tele-operators are still considering the Government’s proposal for an agreement. More specifically, the main ambiguity is the limit of the amount of debt forgiveness which amounts to HRK 10,000.00.

Specifically, citizens’ debts of up to HRK 10,000.00 to banks represent smaller debts in their total debt, and mostly include debts on credit cards and current accounts.

On the other hand, the amount of debt up to HRK 10,000.00 in the case of tele-operators covers a large part of the total debt of citizens towards them, namely HRK 141 million and 55,000 citizens.

Write a Comment

Your email address will not be published.