A new European directive recommends that Member States start implementing the debt-forgiving regulations – a bankruptcy procedure, not only for companies but also for citizens – as soon as possible.
In fact, Bulgaria is the only country in the EU where no personal bankruptcy mechanism has yet been put in place and, unlike business, consumers are becoming life-long debtors.
At the suggestion of the Bulgarian MEP from GERB / EPP Emil Radev, the recommendation was laid down in the final text of the directive adopted by the European Parliament on improving the efficiency of restructuring, insolvency and debt cancellation procedures.
“Consumer over-indebtedness is an issue that raises serious economic and social concerns. The aim of the new directive is to give entrepreneurs a second chance by forgiving their debts. This will eliminate eternal debtors, reduce the amount of non-performing loans in the bank’s balance sheets and prevent the accumulation of such loans in the future. To achieve this, however, it is extremely important that the rules for debt cancellation be applied to consumers, “said Emil Radev during the debates held in the European Parliament’s plenary session.
The MEP has been working for years to remove the so-called ” “Eternal debtors” and the introduction of personal bankruptcy in Bulgarian legislation despite the strong resistance of credit institutions.
“1.7 million people annually lose their jobs as a result of corporate bankruptcy in the EU. The directive will introduce key principles on preventive restructuring so as to increase the opportunities for companies experiencing financial difficulties to restructure at an early stage and prevent bankruptcy and staff shortages. The new European law will make EU-wide procedures more efficient and will ensure that entrepreneurs have a second chance to start a new business after bankruptcy is declared, “Radev explained, emphasizing the benefits of the new rules for small and medium-sized enterprises.
The Bulgarian MEP defined the directive as a significant advance. “For years I have insisted on introducing a debt cancellation for consumers. Bulgaria remained the only Member State with no exemption mechanism for individuals. I believe that with the adoption of the new European legislation this situation will be changed, “Radev commented.
Once the Directive is published in the Official Journal of the EU, Member States will have a maximum of 3 years to introduce the new rules into their national legislation.