New Considerations for Debtors in the Czech Republic

The Czech government is considering a change that could significantly affect people with outstanding debts. In an attempt to manage the debt recovery issue, the government coalition is deliberating the introduction of a so-called minimum wage garnishment, a move strongly advocated for by the Chamber of Executors.

The proposal is that a certain minimum amount would always be deducted from the debtor’s wages, irrespective of the income level. The discussion revolves around the possibility of this amount comprising ten percent of the minimum wage of 1890 crowns or six percent (1134 crowns) for economically vulnerable individuals, such as pensioners.

The way wages are garnished currently is dictated by income and non-seizable amounts. For instance, pensioners in debt with low pensions are not required to repay anything. However, according to the spokesperson of the Ministry of Justice, Vladimir Repka, the yield from wage garnishments is declining, and there is a pressing need to address this issue.

Implementing minimum wage garnishment has been a long-term pursuit of the Chamber of Executors. The organization’s president, Jan Mlynarcik, points out that government regulations largely determine the size of wage garnishments, and the calculation depends on several variables.

Non-profit organizations, led by People in Need, Charity CR, and the Council of Seniors, oppose this move. They argue that the aim is to permit executors to seize wages even from low-income individuals, thereby breaking the statutory non-seizable amount.

These organizations warn that the fixed garnishment would only affect debtors with legal incomes and would include invalid and old-age pensioners, disregarding the amount of their income. They argue that the new proposal may lead to further pushing indebted people into the gray economy and increasing the risk of extreme poverty among pensioners and single parents, including their children.

As of now, the final decision has not yet been made, and discussions continue among representatives of all coalition parties. The preparation of the relevant legal adjustment will only be initiated if consensus is reached at the government coalition level.