Debt forgiveness period offers helping hand to foreigners in the Czech Republic

After nearly two years in which the Covid pandemic has caused serious disruption to business activity throughout the Czech Republic, many are feeling the pinch of tough financial circumstances. As surging Covid cases threaten renewed restrictions, those with outstanding debts may feel particularly concerned about the future.

In an attempt to help those facing the execution of debts, a debt forgiveness scheme has launched in which people can pay a much smaller amount than they would under normal circumstances. The debt forgiveness period will end on January 28.

The fundamental condition for eligibility for the scheme is that the debt in question is to a public institution. Debtors can pay significantly less than they would usually because until January 28, interest, additional fees and penalties will be canceled. Only the amount of the original debt and the executor’s fee (CZK 907.50 including VAT) will apply.

In Prague, the institutions to which debts are most commonly owed are the City of Prague itself, Pražská plynárenská energy company, and the city’s Department of Taxes, Fees and Prices.

The authorities have launched a free information line to help those wishing to take advantage of the scheme, with the People In Need (Člověk v tísni) NGO also playing a key role in spreading awareness.

“The debt relief period applies to foreigners living in the Czech Republic too, it is not limited to Czech citizens. The only conditions are outstanding debt to a public creditor, enforcement by the court bailiff, and sufficient funds on hand to repay the principal debt on time, including the bailiff fee,” David Šmejkal, Director of the Poradna při finanční tísni debt advisory institution, told Expats.cz

With the resurgence of Covid meaning there is little prospect that recent financial hardships will ease any time soon, the debt forgiveness period is an opportunity for people to break out of the trap of ever-increasing debt caused by spiraling fees, penalties and interest. Debts most often concern unpaid fees, arrears for waste collection, debts to energy suppliers, public transport fines or unpaid rents in municipal housing.

The organization of the debt relief period has drawn praise. Prague Deputy Mayor Patrik Nacher stated that “if such cooperation between the coalition and the opposition, between the parliamentary and municipal authorities, and all the components involved, including municipalities, regions, state-owned companies, resulted in proactivity in changing laws, I would be the happiest legislator in the Czech Republic.”