Personal Bankruptcy Law, in force from next month. Five years of grace for bank debtors

The Personal Bankruptcy Law – the lifeline for those who can no longer pay their bank installments, has once again become a tangible possibility. Only one signature is still needed – that of the President, and this law would come into force. According to industry specialists, it is very likely that from next month we can speak of lenient conditions for those who, until now, found themselves in the situation of losing their homes without the right of appeal.

Politicians or bankers, everyone agrees: it is the right time for the implementation of the personal bankruptcy law. Any delay would be useless. Therefore, everyone expects the law to be promulgated by President Klaus Iohannis so that it enters into force by the last day of this month at the latest. The conditions are those already intensely discussed: five years of grace for clients who can no longer pay their installments, during which time they cannot be foreclosed upon and will not even pay penalties. It seems like a heavy burden for banks, which needed some time to make all the necessary calculations to adapt to the new reality, but now everything is ready.

“Almost a year ago, we requested the implementation or earlier application of the law – this means the banking industry felt fully capable of applying this law,” explained Florin Danescu, executive president of the Association of Banks.

A volume of tens of thousands of files per month is expected, but banks and courts are ready

The most difficult part was finding a solution for analyzing the files submitted for personal bankruptcy. According to NBR data, approximately 80,000 people had payment delays of more than three months at the end of last year. It is expected that a large part of these will apply for personal bankruptcy, and their verification would significantly burden banking procedures.

“To avoid situations of abuse, all applicants will go through tough verification filters. All income and expenses will be analyzed by a judicial administrator; it is not an easy administrative procedure at all, on the contrary. In any case, those convicted of tax evasion and those who reached insolvency through fraud are excluded from the start,” explains Marius Manole, a bank broker, for IMOPEDIA.ro.

If implemented, the personal bankruptcy law would become a crucial moment for the Romanian banking industry. The first discussions about this law appeared a year ago but were permanently postponed. In fact, even now, deputies have just rejected an ordinance through which the government requested the postponement of the law until the last day of this year. Meanwhile, banks have spent over half a billion euros to cope with the changes, and the six courts in Bucharest are prepared to open up to a thousand insolvency files monthly.